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Delta Brac Housing Finance Corporation Limited 3

Letter of Transmittal 04Notice of the 19th AGM 05Core Values, Corporate Profi le & Corporate Responsibility 06Mission, Vision and Strategic Objectives 07Corporate Directory 08Profi le of the Board of Directors 09Board Committees 18Management & Executives 20Operational and Financial Highlights 21Financial Highlights as required by Bangladesh Bank 22Historical Record of Dividend Payment 23Graphical Presentation of Performances 24Value Added Statement 27Market Value Added Statement 28Economic Value Added Statement 29Message from the Chairman 30Directors’ Responsibility Statement 32Directors’ Report 33

Events Highlights 49Report on Corporate Governance 51Certifi cate on Corporate Governance 63Report on Internal Control 64Audit Committee Report 66Green Banking Activities 70Corporate Social Responsibility 71Disclosure on Capital Adequacy & Market Discipline 73Report on Going Concern 81Certifi cation on Financial Statements by CEO and CFO 83Independent Auditors’ Report 85 Balance Sheet 87Profi t & Loss Account 88Cash Flow Statement 89Statement ofChanges in Equity 90Liquidity Statement 91Notes to the Financial Statements 92Proxy Form &Attendance Slip 123

Table of Contents

4 Annual Report 2014-15

Dear Sir/Madam,

Re: Annual Report for the year ended June 30, 2015.

We are pleased to enclose a copy of the Annual Report together with the audited fi nancial statements including balance sheet as at June 30, 2015, profi t & loss account, cash fl ow statement and statement of changes in equity for the year ended on that date along with notes thereon for your kind information and record.

Thank you.

Yours sincerely,

Jashim Uddin, FCSCompany Secretary

All ShareholdersBangladesh BankRegistrar of Joint Stock Companies & FirmsBangladesh Securities & Exchange CommissionDhaka Stock Exchange Ltd. Chittagong Stock Exchange Ltd.A. Qasem & Company, AuditorChairman, Audit Committee

Letter ofTransmittal

5Delta Brac Housing Finance Corporation Limited

Notice is hereby given that the 19th Annual General Meeting of the Shareholders of the Company will be held on December 8, 2015 (Tuesday) at 11.00 a.m. at The Eden Ball Room of Hotel Amari, House- 47, Road- 41, Gulshan-2, Dhaka-1212 to transact the following business:

1. Consideration and adoption of Directors’ Report, Audited Financial Statements for the year ended June 30, 2015 and the Auditors’ Report thereon.

2. Declaration of dividend for the year ended June 30, 2015.

3. Appointment/Re-appointment of Directors and confi rmation of appointment of the Independent Directors.

4. Appointment of Auditors and fi xation of their remuneration.

By order of the Board

Sd/-Jashim Uddin, FCS November 15, 2015Company Secretary

Notes:

a. Shareholders whose names appeared on the Depository/Members Register as on “Record Date” i.e. October 20, 2015 are eligible to attend the Annual General Meeting (AGM) and receive dividend.

b. A shareholder may appoint a proxy to attend and vote in his/her place by fi lling proxy form as per Article 89(i) of the Articles of Association. The proxy form, duly completed and stamped at Tk. 20.00, must be deposited at the offi ce not later than 48 hours before the time scheduled for holding the meeting and in default, Form of Proxy will be treated as invalid.

c. In case of non-receipt of Annual Report of the Company sent through courier, Shareholders may collect the same from the Company’s Share Department. Annual Report is also available in Financial Report section of the Company’s website: www.deltabrac.com

d. The concerned Merchant Banks and all Depository Participants (DPs) are requested to provide the soft/hard copies of the list of margin clients along with the bank details of the company to the following email address: [email protected] / share offi ce of the Company for entitlement of dividend.

Notice of the 19th Annual General Meeting

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Core Values • Honesty, integrity and ethics in all aspects of business • Outstanding service to the customer, above all else • Individual opportunity, responsibility and reward based on merit • Hard work and continuous self-improvement, never being satisfi ed • Respect and concern for the individual employee

Corporate Profi le Delta Brac Housing Finance Corporation Ltd. (DBH) is the pioneer, largest and specialist in Housing Finance institution in the private sector of the country. After commencing operation in 1996 the company has registered commendable growth in creating home ownership in Dhaka and other major cities of the country. At the same time, the company has been playing an active role in promoting the real estate sector to the large cross sections of prospective clients who had but yet unfulfi lled dream of owning a home.

Among all Banks and Financial Institutions of Bangladesh only DBH has been rated the highest ‘AAA’ credit rating for nine consecutive years. The level of credit rating provides a very important indication of the fi nancial safety, security and strength of the concerned Bank or Financial Institution and is particularly relevant to its depositors and other investors such as shareholders and lenders.

Corporate Responsibility DBH is recognized as a responsible corporate citizen for its continuous eff ort to promote ownership of housing, wealth creation and also towards the improvement of the underprivileged and weaker sections of the society. DBH is committed to participate in ventures for improvement of our society by taking development initiatives which contribute to the country’s rich cultural heritage.

Annual Report 2014-156

• Focus on building deep and long-standing relationships with our clients, customers as well as real-estate developers, and constantly look to improve the quality of our products and services.

• Focus on developing our human resource talents. • Ensure balanced growth with a disciplined approach to the management of risks and costs.

• Ensure adequate capital and liquidity to sustain our business over the long term.

Vision To be the leading fi nancial institution in the country with satisfi ed customers and employees and to generate value for our shareholders while contributing to the well being of the society.

Mission To strengthen the society of the country by continually expanding home ownership.

Strategic Objectives



Corporate Directory

Head Offi ce

Landmark Building (9th Floor) 12-14 Gulshan North C/A, Gulshan-2, Dhaka-1212

PABX: 09612 334455, +880 (2) 9842374, 58816001, 9882112, Fax: + 880 (2) 9882110

Corporate Website: www.deltabrac.com Corporate e-mail: [email protected]

DBH Customer Center: 09612 222888

Branches

Dhanmondi BranchPantha Plaza (1st Floor), 63/A Lake Circus, Kalabagan (West Panthapath), Dhaka-1205 PABX: 09612 334455, +880 (2) 8130906, 9124112, 58155745, Fax: +880 (2) 8117264

Motijheel BranchD R Tower (7th Floor), 65/2/2, Purana Paltan, Box Culvert Road, Dhaka-1000PABX: 09612 334455, +880 (2) 7111774, 7111778, 9565053, Fax: +880 (2) 9554269

Uttara BranchUnion Nahar Square (4th Floor),Sonargaon Janapath Road, Plot- 19,Sector 13, Uttara, Dhaka-1230PABX: 09612 334455, +880 (2) 8933057, 8991580Fax: +880 (2) 8991538, Ext.-107

Chittagong BranchBMA Bhaban (5th Floor) 1367, CDA Avenue, GEC Circle, Chittagong PABX: 09612 334455, +880 (31) 2551224-6 Fax: +880 (31) 2551227

Sylhet Branch19/A, Kumarpara Road, (1st Floor) , Kumarpara, Sylhet,PABX: 09612 334455, + 880 (821) 722489, 722490

Bankers

BRAC Bank LimitedCitibank, N.A. Commercial Bank of Ceylon PLCHSBC NRB Bank Limited

Prime Bank Limited Pubali Bank Limited Standard Chartered Bank Standard Bank Limited

Auditors

A. Qasem & Co. Chartered Accountants

Gulshan Pink City, Suites # 01-03, Level # 7, Plot # 15, Road # 103, Gulshan Avenue, Dhaka-1212

Delta Brac Housing Finance Corporation Limited 9Delta Brac Housing Finance Corporation Limited 9

Mr. Faruq A Choudhury is the Chairman of the Board of Directors of the Company. He joined the then Pakistan Foreign Service in 1956, after having graduated with Honours in English. Subsequently, as a part of his training programme, he studied International Law at the Fletcher School of Law and Diplomacy, Tufts University, USA. He also underwent training at the Foreign Service Institute Washington DC and at the British Foreign Offi ce in London. He studied the French Language at the Alliance Francaise in Paris.

Mr. Choudhury had diplomatic assignments in Rome, Beijing, The Hague and Algiers before being posted as a Director at the Pakistan Foreign Offi ce. After the emergence of Bangladesh, he was appointed as the Chief of Protocol and later served as Deputy High Commissioner in London and Ambassador to the UAE in Abu Dhabi and as Ambassador to the then EEC and Benelux countries in Brussels. Later he was appointed as Additional Foreign Secretary in 1982. From 1984 to 1986 he was Foreign Secretary and when SAARC

was launched in 1985, he served as the Secretary General of the fi rst SAARC summit. In 1986, he was appointed as High Commissioner to India in New Delhi from where he retired in 1992.

He took over as Advisor BRAC in 1992 and served in that capacity till 2006. He is a Member of the Board of Trustees of BRAC University.

He has been a Director of DBH, nominated by BRAC, since 1996.

Faruq A ChoudhuryChairman

Profi le of the Board ofDirectors

Annual Report 2014-1510 Annual Report 2014-1510

Mr. Nasir A. Choudhury, Advisor of Green Delta Insurance Company Limited (GDIC) has been in the insurance profession for over the last 50 years. After obtaining his Masters Degree from the University of Dhaka, he started his career in Karachi in the then Pakistan Insurance Corporation in 1958. Mr. Choudhury received advanced training in insurance and reinsurance from UK and Germany during 1961 and 1962. After the liberation of Bangladesh, he was responsible for arranging reinsurance for the newly established Bangladesh Insurance Corporation and subsequently for Sadharan Bima Corporation as General Manager. Mr. Choudhury was the Managing Director of GDIC since its inception until his retirement in May 2013.

Mr. Choudhury is an executive committee member of the Federation of Afro-Asian Insurers & Reinsurers (FAIR). He was the Honorable Insurance Advisor of Bangladesh Biman and Bangladesh Shipping Corporation for decades. He was the Chairman of Bangladesh Insurance Association, the offi cial body of all the private sector insurance companies of the country from 2001 to 2005.

Mr. Choudhury is one of the sponsors of Union Capital Limited and Director of Progressive Life Insurance Co. Limited and United Hospital (Pvt.) Limited and Managing Director of Nascom (Pvt.) Ltd. Mr. Choudhury is also an Executive Committee Member of Bangladesh Insurance Association.

He was honored with “Lifetime Achievement Award” by The DHL-Daily Star in April 2010 for his outstanding contribution towards the development of the insurance industry in Bangladesh.

He has been a Director of DBH, nominated by Green Delta Insurance Company Limited, since 1996.

Nasir A. Choudhury


Mr. Rajeev Sardana is a member of the Institute of Chartered Accountants of India. He has been working, since 1986, in diff erent capacities for Housing Development Finance Corporation Limited (HDFC), the largest housing fi nance institution in India. He is presently working as a member of the Executive Management of the Corporation. He has also been involved in consultancy assignments undertaken by HDFC in various countries across Asia to support and establish their housing fi nance institutions.

An alumnus of Shri Ram College of Commerce, University of Delhi, Mr. Sardana did his articles training with S B Billomoria & Company, Chartered Accountants, who are now part of the Deloitte group.

He has been a Director of DBH, nominated by HDFC Investments Limited, since March 2012.

Mr. A Z Mohammad Hossain after obtaining LL.B degree in 1963 was enrolled as an advocate in the then High Court. He went to the UK for higher studies in the same year.

In 1971 he joined the liberation movement in the UK and became the convener of “Bangladesh Students Action Committee” in the UK. At the request of the then Bangladesh Mission to UK Late Justice Abu Sayeed Chowdhury, he along with 3 others attended and lobbied for Bangladesh at the Inter-Parliamentary Conference held in Paris. He was also sent by Late Justice Abu Sayeed Chowdhury for the same purpose, to attend the Pug Wash Conference held at Siania, Romania. He returned to Bangladesh in 1995 and took the offi ce of Managing Director of Chandra Spinning Mills Ltd.

He has been a Director of DBH, nominated by Green Delta Insurance Company Limited, since June 2012.

Rajeev Sardana A Z Mohammad Hossain


Ms. Mehreen Hassan is a Barrister-at-law and Advocate practising in the High Court Division of the Supreme Court of Bangladesh. Her areas of practice (both litigation and advisory matters) involve mostly Corporate and Commercial laws. She has experience working with several banks and insurance companies on matters involving Banking, Insurance laws and Securities laws. She also practices in the areas of International Arbitration, Admiralty matters, Constitutional and Administrative laws.

Ms. Hassan obtained her Bar-at-law degree from City University, UK in the year 2007 and is a member of the Lincoln’s Inn, UK. She completed a mini-pupilage with Staple Inn Chambers in London prior to returning to Bangladesh in 2007. She is a member of the Dhaka Bar Association and the Supreme Court Bar Association of Bangladesh and also participates in various social and charitable activities through her association with Zonta International Dhaka.

Ms. Hassan has been a Director of DBH, nominated by Delta Life Insurance Company Limited, since June 2012.

Mr. Swapan Kumar Sarkar is a Fellow Member of the Institute of Chartered Accountants of Bangladesh. Prior to joining the services of Delta Life Insurance Company Limited as Senior Vice President in the year 1997, he served at diff erent levels in local and international companies. He had been promoted to the position of Deputy Managing Director of the Company in the year 2006. Presently, he is serving as the Managing Director & CEO of Delta Life Insurance Company Limited.

Mr. Sarkar completed B. Com. (Hons) and M. Com. majoring in Management from the Dhaka University before starting his career as a trainee accountant with Rahman Rahman Huq & Co. Chartered Accountants and worked there till 1981 after qualifying as a Qualifi ed Assistant. He went abroad in the year 1990 to join as the Management Accountant in Chilanga Cement Limited, Zambia a subsidiary of Commonwealth Development Corporation and served there till December 1994. He also served as Chief Accountant in National Milling Co. Limited, Zambia from September 1995 to October 1996.

He has been a Director of DBH, nominated by Delta Life Insurance Company Limited, since August 2012.

Mehreen Hassan Swapan Kumar Sarkar


Ms. Adeeba Rahman is an Associate of Chartered Insurance Institute (ACII- Life) UK and Chartered Insurer. She did her MBA from Rochester Institute of Technology (R.I.T.), New York, USA. She is also experienced in working with two International Banks, two Life Insurance Companies at diff erent levels, as well as gathered experience from a renowned Securities Company and a Tea Company.

At the beginning of her career in Life Insurance, Ms. Rahman joined Delta Life Insurance Company Ltd. in January 2002. In her service time, she was Head of Marketing, Underwriting, Policy Servicing, Actuarial, Human Resource Development and Control & Compliance department and developed as well as executed various strategic guidelines and action plans of the Company. She chaired the Claims Committee and assisted in claim control and faster claim processing at Delta Life Insurance Company.

Ms. Rahman served as Additional Managing Director of Popular Life Insurance Company Ltd. from March 2006 to March 2013.

Being a Chartered Insurer and an Associate Member of Chartered Insurance Institute, UK accompanied by long outstanding experience of more than 14 years in almost all the areas of life insurance business. Ms. Adeeba Rahman, joined again in Delta Life Insurance Company Ltd. and serving as Additional Managing Director and is responsible for supervising and controlling the activities of some important departments like Business Development, Actuarial, IT, Re-insurance, Claims and Servicing etc.

She has been a Director of DBH, nominated by Delta Life Insurance Company Limited, since December 2013.

Adeeba Rahman


Dr. Mushtaque Chowdhury is the Vice Chair of BRAC, the world’s largest non-governmental organization. Previously, he was its Deputy Executive Director, founding Director of the Research and Evaluation Division and founding Dean of the James P. Grant School of Public Health. Dr. Chowdhury is also a Professor of Population and Family Health at the Mailman School of Public Health of Columbia University in New York. During 2009-12, he worked as the Senior Adviser to the Rockefeller Foundation, based in Bangkok, Thailand. He also served as a MacArthur Fellow at Harvard University. Dr. Chowdhury holds a PhD from the London School of Hygiene and Tropical Medicine, an MSc from the London School of Economics and a BA (Hon’s.) from the University of Dhaka. Dr. Chowdhury was a coordinator of the UN Millennium Task Force on Child Health and Maternal Health, set up by the former Secretary General Kofi Annan. He is a co-recipient of the ‘Innovator of the Year 2006’ award from the Marriott Business School of Brigham Young University in USA and in 2008 he received the PESON oration medal from the Perinatal Society

of Nepal. Dr. Chowdhury has published over 150 articles in peer-reviewed international journals including the International Journal on Education, the Lancet, the Social Science & Medicine, The Scientifi c American and the New England Journal of Medicine.

Dr. Chowdhury is a founder of the Bangladesh Education Watch and Bangladesh Health Watch, two civil society watch-dogs on education and health respectively. He is on the board and committees of several organizations and initiatives, including: Board of Trustees of BRAC University in Bangladesh, and International Advisory Board of the Centre for Sustainable International Development at the University of Aberdeen in UK.

He has been a Director of DBH, nominated by BRAC, since February 2015.

Dr. A M R Chowdhury


Mr. Mahibul Islam Chowdhury did his M. A. in History from the University of Dhaka and M.S. in Agricultural Extension Programme from the University of Wisconsin, Madison, U.S.A. He joined the Govt. Services of the then Pakistan and continued his services in Bangladesh also for 33 long years. He served the country in various capacities and was appointed as the Secretary, Ministry of Information in the year 1999, later he was appointed as the Secretary, Ministry of Land and served the position till his retirement in the year 2002.

Mr. Islam was awarded a Gold Medal of Honour by ‘The American Biographical Institute’ for outstanding performance to develop the socio-economic condition of the poor people of Bangladesh. He was also Awarded the Presidential Gold Medal for his contribution to develop the rural infrastructure in 1978.

After his retirement, he took over as an Executive Director of Silver Line Group and served there till December, 2010. At present, he is the Chairman of Social Development Foundation (SDF), appointed by the Government of Bangladesh and also Chairman, Managing Committee of Rajdhani Mohila College, Rupnagar, Mirpur, Dhaka, Advisor - E.N.T Foundation & Cancer Hospital, Dhaka.

He is also an Independent Director of DBH, since December 2012.

M I Chowdhury


Dr. A K A Mubin did his M.A. in Economics from the University of Dhaka and completed his Ph.D. in Development Economics from Strathclyde University, Glasgow, U.K. Subsequently as a part of his training programme, he underwent various training, such as ‘Budgetary Process and the Ananlysis at EDI, World Bank’, ‘Financial Programming and Policy at IMF’, ‘Washington D.C, International Management Exchange at Federation of Korean Industries, Korea’ and ‘Banking Supervision at Federal Reserve System Training Center, Washington USA’.

He served in various capacities and was appointed as the Secretary, Jamuna Bridge Division, Ministry of Communication, Govt. of Bangladesh, Additional Secretary (Budget, Regulation, Foreign Exchange and Administration), Finance Division, Ministry of Finance, Govt. of Bangladesh, Chairman, Bangladesh Parjatan Corporation and Managing Director, Bangladesh Shilpa (Industrial) Bank (BSB).

Mr. Mubin was also the Member in the Boards of Directors of various institutions in Bangladesh, including Securities and Exchange Commission, Bangladesh Bank of Small Industries and Commerce Ltd. (BASIC Bank), International Finance and Investment Co. Ltd. (IFIC Bank), Bangladesh Krishi

Bank, Security Printing Corporation of Bangladesh, Investment Corporation of Bangladesh, National Tea Company, and Chittagong Stock Exchange.

At present, he is the Chairman, National Tea Company, Executive Chairman, United Air Bangladesh Ltd., Chairman, Peninsula Asset Management Company Limited, Chairman, Doer, IT based fi nancial service provider and Director, National Credit Rating. Mr. Mubin, as a Social Worker involved with various societies like, Bangladesh Economic Association, Bangla Academy and ENT and Head-Neck Cancer Foundation and Safe Home for Girls.

He has been an Independent Director of DBH, since September 2015.

Dr. A K A Mubin


Mr. Quazi Mohammad Shariful Ala is the Managing Director & CEO of the Company. Mr. Ala graduated with a BSc (Economics) fi rst class honours degree from the London School of Economics (LSE), University of London in 1981. He joined the London offi ce of Price Waterhouse in 1981 and qualifi ed as a member of the Institute of Chartered Accountants in England & Wales in 1984 and left Price Waterhouse in 1987. He is also a fellow of the Institute of Chartered Accountants of Bangladesh. Prior to joining DBH, he was the Finance Director of Green Delta Insurance Company Limited, one of the corporate sponsors of DBH.

He has extensive fi nance and corporate management experience, primarily in the fi nancial services sector, both in Bangladesh and in the United Kingdom. He has served as a non-executive

Director on the Boards of several prominent companies, including BRAC Bank Limited, MJL Bangladesh Limited, Omera Fuels Limited, Omera Petroleum Limited, Unicap Securities Limited and Omera Cylinders Limited.

Mr. Ala has led the executive management team of DBH as the Managing Director & CEO, since 1997.

Quazi Mohammad Shariful AlaManaging Director & CEO


Board Committees

Audit Committee Mr. M I Chowdhury Chairman

Mr. Faruq A ChoudhuryMr. Nasir A. Choudhury Mr. A Z Mohammad Hossain Mr. Swapan Kumar Sarkar, FCA

Executive Committee Ms. Mehreen Hassan, Bar-at-lawChairperson

Ms. Adeeba Rahman, ACII-LifeDr. A M R Chowdhury Mr. Q. M. Shariful Ala


Management and Executives

Tanvir AhmadHead of Human Resources

Nasimul Baten Head of Operations

A. K. M. Tanvir Kamal Head of Credit

Md. Hassan Iftekhar YussoufHead of IT

Saiyaf EjazHead of Recovery & Administration

Md. Zakaria Eusuf Head of Branch - Head Offi ce

Syed Aminul Islam Head of Finance

Md. Fakrul Amin Head of Legal

Tabassum Samad ChowdhuryHead of Deposit Operations

Moahedul Mowla Head of Branch - Chittagong

Md. Golam Rosul Head of Branch - Dhanmondi

Sabed Bin Ahsan Branch Manager - Uttara

Khandaker Imran Habib Manager - Sales

Md. Ariful Bari Rumi Branch Manager - Motijheel

Khandaker Satil Sayeed Controller of Accounts

Jashim Uddin Company Secretary

Nahid Ahmed Manager - Treasury

Mohammad Manjurul Alam Manager - Sales

Md. Mamunur Rashid BhuiyanManager - Recovery

Kazi Hasanul Islam Manager - Loans

A. H. M. Mostofa Kamal Manager - Technical

Siddartho Sangkor Kirtonia Manager - IT

Mir Md. Mukhlesur Rahman Manager - Credit

Imtiaz Elahi Manager - Brand & Communications

Bidhan Krishna GhoshBusiness Development Manager

Oliul Haque Khandaker Manager - Administration

Md. Mustaquimur RashidManager - Human Resources

Md. Mamun-Ur-RashidManager - IT

Md. Rasel SarkerManager - IT

Md. Saiful Alam Talukder Manager - Loans

Q. M. Shariful Ala Managing Director & CEO


Operational andFinancial Highlights

(Figures in million Taka except ratios and per share data)Operational Highlights 30-Jun-11 30-Jun-12 30-Jun-13 30-Jun-14 30-Jun-15

Loan sanction 6,128 5,757 5,405 6,834 7,715

Loan disbursement 6,460 5,904 5,357 6,583 7,769

Cumulative disbursement 34,997 40,901 46,258 52,841 60,610

Cumulative sanction 36,161 41,948 47,353 54,187 61,902

(Amount in Million Taka except Ratios, EPS and BVPS)

Financial Highlights 30-Jun-11 30-Jun-12 30-Jun-13 30-Jun-14 30-Jun-15

Profi t before tax 907 765 1,009 1,199 1,259

Profi t after tax 502 404 528 607 685

Shareholders' fund 1,756 2,151 2,569 2,776 3,171

Total deposit 13,308 15,751 19,540 21,550 24,703

Long term borrowing 7,131 7,087 7,218 5,039 4,339

Housing loan portfolio 21,115 23,598 24,901 26,831 29,030

Total balance sheet size 24,501 27,641 33,004 33,945 35,686

NPL ratio (%) 0.14% 0.20% 0.26% 0.22% 0.30%

Return on equity (average equity) 34.40% 21.27% 22.95% 22.78% 23.05%

Earnings per share 9.75 3.91 4.47 5.15 5.90

Earnings per share (restated) 4.24 3.4 4.47 5.15 5.90

Book value per share 32.83 20.32 21.27 23.92 27.32


Financial Highlights as required by Bangladesh Bank

(Figures in million Taka except ratios and per share data)

Financial Highlights 30-Jun-15 30-Jun-14

Paid up capital 1,160 1,160 Total capital 3,171 2,776 Capital surplus/(defi cit) 160 160 Total assets 35,686 33,945 Total deposits 24,703 21,550 Total loans & advances 29,248 27,087 Total contingent liabilities and commitments 421 444 Credit deposit ratio (times) 1.18 1.26 Percentage of classifi ed loans against total loans and advances 0.30% 0.22%Profi t after tax & provision 685 607 Amount of classifi ed loans during current year 87.68 58.81Provision kept against classifi ed loans 87.68 58.81Provision surplus/ defi cit 695.23 475.82 Cost of fund 9.64% 11.32%Interest earning assets 34,529 32,864 Non interest earning assets 1,157 1,081 Return on equity (ROE) 23.05% 22.78%Return on asset (ROA) 1.97% 1.81%Income from investment 13 20 Earnings per share 5.90 5.15 Net income per share 5.90 5.15 Price earning ratio 13.76 12.04


Historical Record of Dividend PaymentThe Company started its journey in early 1997 and was able to pay the dividend to its shareholders since 2000. The historical record of payment of

dividend is given hereunder as general disclosure to the stakeholders of the Company.

Year Paid-up Capital (Tk.) Dividend (%)

1999-2000 20,00,00,000.00 7.50 (Cash)

2000-2001 20,00,00,000.00 12.00 (Cash)

2001-2002 20,00,00,000.00 15.00 (Cash)

2002-2003 20,00,00,000.00 15.00 (Cash)

2003-2004 20,00,00,000.00 18.00 (Cash)

2004-2005 20,00,00,000.00 22.00 (Cash)

2005-2006 22,00,00,000.00 25.00 (10% stock & 15% Cash)

2006-2007 22,00,00,000.00 30.00 (Cash)

2007-2008 27,00,00,000.00 New Issue of Tk. 500,00,000 (IPO)

2007-2008 35,10,00,000.00 30.00 (Stock)

2008-2009 40,36,50,000.00 32.00 (15% Stock & 17% Cash)

2009-2010 50,45,62,500.00 35.00 (25% stock & 10% Cash)

2010-2011 100,91,25,000.00 100.00 (Stock)

2011-2012 116,04,93,750.00 25.00 (15% stock & 10% Cash)

2012-2013 116,04,93,750.00 25.00 (Cash)

2013-2014 116,04,93,750.00 25.00 (Cash)

Profits

Housing Loan Portfolio & Performance

2010-11 2011-12 2012-13 2013-14 2014-15

996

869

1,132

1,395 1,438

907

765

1,009

1,1991,259

502404

528607

685

Operating profit before provision Profit before tax Profit after tax

Million Taka

Million Taka

Housing Loan NPL (%)

21,115

23,59824,901

26,831

29,030

2010-11 2011-12 2012-13 2013-14 2014-15

0.1

4%%

0.2

0%%

0.2

6%

02

6%

0.2

2%

0.3

0%

0%

Financial Performance



Total Assets & Fund Under Management

Fund Employed

Total Assets Fund under Management

24,50127,641

33,004 33,945 35,686 34,976

39,790 44,807

48,637

2010-11 2011-12 2012-13 2013-14 2014-15

53,951

Deposit 77%

77%

10%13%

Long term loans 13%

Shareholders Equity 10%

Million Taka

Equity

Deposits

Share Capital Reserves & Surpluses

505

1,0091,160 1,160 1,160

2010-11 2011-12 2012-13 2013-14 2014-15

1,2511,142

1,409

1,616

2,011

13,308

15,751

19,540

21,550

24,703

2010-11

2011-12

2012-13

2013-14

2014-15

Million Taka

Million Taka



Value Added StatementFor the year ended June 30, 2015

Value added is the wealth DBH has created through extending mortgage loan and various services. The value added statement shows the total worth created and how the same was

distributed to meet various obligations and reward those responsible for its creation. A portion also retained in the business for continued operation and expansion of DBH.

Figures in BDT

Particulars2014-2015 2013-2014

Amount % Amount %Value addedNet interest income 1,638,130,927 108.21% 1,564,047,111 110.73%Fees earned 104,390,616 6.89% 98,475,718 6.97%Investment income 12,986,809 0.86% 19,602,473 1.39%Other income 28,028,566 1.85% 28,284,739 2.00%Operating expense except salary & allowances, depreciation & amortization (91,314,533) -6.03% (102,450,165) -7.25%Provision for loan, advances & investments (178,367,758) -11.78% (195,513,637) -13.84%Total value added by the company 1,513,854,627 100% 1,412,446,239 100%

Distribution of value added EmployeesAs salary & allowances 241,158,656 15.93% 199,659,414 14.14%Provider of capitalDividend to ordinary shareholders 348,148,125 23.00% 290,123,438 20.54%Dividend to preference shareholders - 10,000,000 0.71%GovernmentIncome tax 574,138,286 37.92% 591,849,677 41.90%Retained for business growthEarning retained in the business 337,105,599 22.27% 307,220,124 21.75%Depreciation and amortization 13,303,961 0.88% 13,593,586 0.96%Total distribution 1,513,854,627 100% 1,412,446,239 100%

2013-2014

Retained in the business 23.15%

Employees 15.93%

Shareholders 23%

Government 37.92%

Retained in the business 22.71%

Employees 14.14%

Shareholders 21.25%

Government 41.90%2014-2015


Market Value Added (MVA) StatementMarket Value Added statement gives a picture of the Company’s performance evaluated by the capital market investors through the share price of the company. This statement depicts the diff erence between the market value of a company and the capital contributed by the investors.

Higher MVA is better for the company. A high MVA indicates that company has created substantial

wealth for the shareholders. A negative MVA means that the value of management’s actions and investments are less than the value contributed to the company by the capital market.

Market Value Added represents the confi dence that the market places on the future stream of EVAs. The following statement shows how MVA has been arrived at for the year ended June 30 2015 and 2014.

ParticularsAmount in BDT

2014-2015 2013-2014

Market value of shares outstanding 9,423,209,250 7,195,061,250

Book value of share outstanding 1,160,493,750 1,160,493,750

Market value added 8,262,715,500 6,034,567,500

9,4

23

8,2

63

1,160

7,1

95

6,0

35

2014-2015 2013-2014

Market value of shares outstanding

Book value of shares outstanding

Market value added

1,160

Million Taka


Economic Value Added (EVA) StatementOne of the most useful performance measurements to account for the ways in which business value can be added or lost is Economic Value Added or EVA. Another term for this metric is Economic Profi t.

Economic Value Added is the surplus generated by an entity after meeting an equitable charge towards providers of capital. It is the post-tax return on capital employed (adjusted for the tax shield on

debt) less the cost of capital employed. Companies which earn higher returns than cost of capital create value, and companies which earn lower returns than cost of capital are deemed harmful for shareholders value.

EVA has been calculated by the following formula:EVA = Net operating profi t ‒ Taxes ‒ Cost of capital

ParticularsAmount in BDT

2014-2015 2013-2014

Net operating profi t 1,437,759,768 1,394,706,876 Provision for taxes 574,138,286 591,849,677 Net operating profi t after tax (NOPAT) 863,621,482 802,857,199

Charges for capitalCapital employed 3,937,563,342 3,449,305,282 Cost of equity (%) 11.40% 12.10%Capital charge 448,882,221 417,365,939 Economic value added 414,739,261 385,491,260

Capital employed as on June 30Shareholder's equity 3,170,916,416 2,775,786,130 Accumulated provision for doubtful accounts and future losses 1,053,538,105 874,886,032

Total capital employed 4,224,454,521 3,650,672,162Average capital employed 3,937,563,342 3,449,305,282


In the year 2014 - 2015, our expertise and fi nancial strength have continued to be tested in diffi cult market conditions. However our service quality together with our in-depth market specialization, conservatism and our straightforward character stood us in relatively good stead.

The slow recovery in the real estate sector continued to aff ect our portfolio growth during this year. The housing loan portfolio of DBH stood at Taka 29.03 billion at the close of June 30, 2015. It may be worth mentioning that in the face of diffi cult economic situation the quality of our assets continues to be strong with non-performing loans remaining below half percent. Presently, DBH has funds under management in excess of Taka 53.95 billion.

The sluggish growth of real estate industry coupled with downward movement of interest rates on our adjustable rate home loan portfolio, has also aff ected our profi tability. The operating profi t before provisions stood at Taka 1,437.76 million. The Board has recommended Tk. 3.00 per share (30%) as cash dividend out of profi t for the year ended June 30, 2015.

I am pleased to inform you that DBH has retained its highest credit rating of ‘AAA’ (triple A) for the 9th consecutive year. As a matter of fact, among all local banks and fi nancial institutions, DBH is the only one to have retained the highest credit rating in such a consecutive manner. This in itself is a testament to the outstanding fi nancial resilience of the Company.

Message from the Chairman

Dear Shareholders,

It is a great pleasure for me to welcome you all to the 19th Annual General Meeting (AGM) of the Company. On behalf of the Board of Directors, I would like to take this opportunity to express my heartfelt gratitude to you all for the continued confi dence and trust that you have placed in us and in our endeavors.


As mentioned earlier, the business growth in the housing industry has not met our expectations. The demand for property is still very high, but unfortunately the unstable and uncertain economic situation created by volatile political situation has hampered people’s investment in country’s real estate sector. Also the price level, though corrected somewhat in recent years, is still considered as high for the middle income households. Understandably, the anticipation of further price correction and uncertainty about political situation are causing large groups of these potential customers to hold back.

Development of aff ordable housing is paramount to sustainable growth of real estate sector. However, due to inadequate policy support, the real estate developers of our country have been doing business mainly by catering to the upper and upper-middle income group whereas the middle income and low income households are still untapped. With the largest segment of the population belonging to these income groups, the real estate business has a huge growth potential in this country. But the lack of community services like educational institutions, hospitals, lack of proper transportation facilities are deterring the establishment of township projects outside the metropolitan areas. Real estate market must grow beyond the city centre areas to establish a sustainable price level which will make housing aff ordable for all.

As a pioneer in the housing fi nance industry of the country DBH has recognized the need for geographical diversifi cation of the housing sector. This year DBH has opened new sales offi ces at city outskirts like Gazipur, Savar, Mirpur and Narayanganj. These latest additions to the DBH distribution network will cater to the gradually increasing middle and lower income groups

living outside metropolitan cities and also play an important role in establishing a balanced growth in the real estate sector of the country.

Our core objective for 2015 - 2016 is to broaden our customer base and to deepen the relationship we have with our customers, harnessing the growing strength of the DBH brand and our core competency. Against the back drop of the prevailing weak real state scenario, the outlook for 2015‒2016 is challenging. However, we have fi rm faith in our expertise and motivation to develop ourselves through innovating strategies, expanding partnership and maximizing value to the shareholders.

I thank all our shareholders and my colleagues in the Board of Directors for their guidance and support. I also convey my sincere appreciation to the management and staff of DBH for their dedication and hard work under the able guidance of the Managing Director. I am also thankful to the Bangladesh Bank, Bangladesh Securities & Exchange Commission (BSEC) and the Registrar of Joint Stock Companies and Firms and the DSE & CSE for their support. We look forward to leveraging on the opportunities and face the challenges which will arise in the coming days.



Responsibility to Financial Statements

The Board of Directors of Delta Brac Housing Finance Corporation Limited would like to inform that the audited accounts containing the Financial Statements for the year ended 30th June 2015 are in conformity with the requirements of the Companies Act- 1994, Financial Institutions Act- 1993, International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) as adopted by ICAB, Securities & Exchange Rules- 1987 and the Listing Regulations of Dhaka and Chittagong Stock Exchanges and they believe that the fi nancial statements refl ect fairly the form and substance of transactions carried out during the year and reasonably present the Company’s fi nancial condition and results of operations. These Financial Statements are audited by the Statutory Auditors, M/s. A. Qasem & Co. Chartered Accountants, Dhaka.

In accordance with the provisions of section 185 of the Companies Act, 1994 and based on the information provided by the management, your directors state that:

(i) In the preparation of accounts, the applicable accounting standards have been followed;

(ii) They have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of aff airs of the Company as at 30th June, 2015 and the profi t of the Company for the year ended on that date;

(iii) They have taken proper and suffi cient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1994 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

(iv) They have prepared the annual accounts on going concern basis.

Responsibility to Internal Control System

The Company has taken proper steps and suffi cient care in building a system of internal control, which is reviewed, evaluated and updated regularly. The internal audit department of the Company conducts periodic audit to provide reasonable assurance that the established policies and procedures of the Company were consistently followed.

Opinion of the External Auditors

M/s. A. Qasem & Co., Chartered Accountants, the external auditor of the Company have carried out annual audit to review the system of internal controls, as they consider appropriate and necessary, for expressing their opinion on the fi nancial statements. They have also examined the fi nancial statements made available by the management together with all the fi nancial records, related data, minutes of shareholders meeting and board meetings, relevant policies and expressed their opinion.

Directors’ Responsibility Statement


Dear Shareholders,

The Directors of Delta Brac Housing Finance Corporation Limited have the pleasure of presenting the Directors’ Report of your Company together with audited accounts for the year ended 30th June 2015.

Bangladesh Economy

Despite being challenged by political instability, weak global markets and structural constrains, the overall economic growth of Bangladesh has carried on its track in the fi scal year 2014-15. The fi scal year ended with quite a few macroeconomic high points including lower infl ation, declining interest rate, stable exchange rate, manageable fi scal defi cit, positive balance of payments and augmented foreign exchange reserves.

On looking back, in the FY 14-15 Bangladesh has been able to maintain its journey towards achieving sustainable economic growth. According to the provisional estimate of Bangladesh Bureau of Statistics (BBS) Bangladesh’s GDP has grown at a rate of 6.51 percent in the FY 14-15 which were 6.06 and 6.01 in the previous two years respectively. The GDP growth rate for FY 14-15 was 0.8 percentage point lower than the targeted 7.3 percent. Among the large contributing sectors in GDP, the industrial sector and service sector achieved higher growth rates than previous year and has grown at a rate of 9.60 percent and 5.83 percent respectively. On the contrary growth rate of agricultural sector has gone down to 3.04 percent from 4.37 percent in the previous fi scal year.

Annual average infl ation has gradually decreased throughout the FY 14-15 and reached 6.40 percent in June 2015 from 7.3 percent in the previous year. On a point-to-point basis overall infl ation in July 2014 was 7.04 percent and has reduced by 0.79

basis points to reach 6.25 percent in June 2015. However, while food infl ation followed a declining trend, non-food infl ation increased. With careful monitoring and guideline Bangladesh Bank has contained the infl ation rate within the targeted 6.5 percent.

Exports rose by 3.35 percent year-on-year to USD 31.2 billion in FY 2015 from USD 30.19 billion in FY 2014. Exports have been riding on the slow lane for the majority of FY 14-15 period as garments exports, which makes up for the lion’s share of Bangladesh’s export earnings showed limited growth. Exporters also faced added diffi culties in Euro zone, which accounts for close to 60% of the country’s export earnings, as Euro zone growth remained sluggish and Euro depreciated by over 20 percent against the Bangladesh Taka (BDT) hurting price competitiveness. But from March this year, exports started picking up due to the apparel retailers’ reinstatement of confi dence in Bangladeshi garments industry after positive notes on workers safety standards by two foreign inspection agencies Accord and Alliance.

Imports grew by 12.20 percent to USD 37.23 billion during the fi rst 11 months against USD 33.18 billion in the corresponding period of the previous fi scal year, whereas import settlements for July-May period amounted to USD 35.17 billion, up 3.81% from USD 33.88 billion for the same period of last fi scal year. Payment of import bills for fuel shrank due to slump in price in the international market. As per Central Bank reports, capital machinery and raw materials imports made up most of the rise in imports, which also indicates to rising investments and an expansion of production capacity in the near term.

Bangladesh has turned back the trend towards growing remittance and in the fi rst nine months of FY 14-15 total remittance infl ow stood at USD 15.31 billion. This was 7.60 percent higher than the

Directors’ Report


amount at the same time of last year. Trade defi cit increased in FY 14-15 as compared to the previous year, due to increased foreign investment. Capital and fi nancial account surplus increased and the Balance of Payment account maintained an overall surplus of USD 3.59 billion as of May 2015. This has also led to an increase in the Foreign Currency reserve in the fi scal year 2014-15. As on June 30, 2015 the foreign currency reserve stands at USD 25.02 billion which is enough to meet the import expenses of 7 months.

During the fi rst four months of FY 15, BDT gained steadily against the US Dollar, with the pair trading at 77.40 at the end of September. In November and December, there was a hike in demand for the greenback backed by sluggish exports and large payments for petroleum products, capital machinery and government infrastructure projects when dollar jumped to trade at around 77.95 against Taka. From the beginning of January 2015, the FX market cooled down gradually as political unrest deterred import orders in the beginning months and exports and remittances also picked up in the following months. By the end of January, USD/BDT dropped to 77.80. USD/BDT traded unchanged at 77.80 from the end of January till the end of the fi scal year.

In FY 2014-15 the Dhaka Stock Exchange (DSE) improved both in terms of index value and trade volume. The number of listed companies and issued securities grew at a reasonable pace. At the end of June 2015, the number of listed securities at DSE stood at 555 which was 536 in June 2014. Market capitalization of DSE stood at BDT 3247.31 billion at June 30, 2015. DSEX Index increased by 2.29 percent on a year-on-year basis and closed the year on 4,583.11 points.

Performance of Financial Sector in 2014-15

In FY 2014-15 the Central Bank maintained policy continuity in formulating and implementing inclusive and investment friendly monetary policy. The policy was aimed at achieving the desired level of growth while keeping infl ation within a

tolerable limit. To stimulate growth by providing fi nancial assistance to the productive sector was one of the key objectives of the monetary policy for the FY 2014-15. In the monetary policy for the second half of the FY 15 (Jan-Jun), the target was set to keep infl ation rate at 6.5 percent, which was 7.35 percent in FY 13-14.

Due to the excess liquidity prevalent in the market, interest rates continued to decline throughout the year. In June 2015, weighted average deposit rate for scheduled banks has gone down to 6.80 percent from 7.79 percent in June 2014. On the other hand weighted average lending rates of scheduled banks also went down to 11.67 percent in June 2015, from 13.10 percent in June 2014. The interest rate spread also reduced to 4.87 percent in June 2015 from 5.31 percent during the same time previous year which indicate that market lending rates decreased more than the rates on deposits. Understandably, amidst ample liquidity the overnight rates were relatively low. Call money rate went up at the beginning of Q3FY15 and reached as high as 8.57 percent (weighted average). Subsequently it continued to decline for the rest of the FY and stood at 5.79 percent at the close of June 2015.

The ratio of non-performing loans (NPL), in both gross and net terms, increased at the end of Q3FY15 compared to the end of Q2FY15. Gross NPL went up from 9.7 percent at the end of Q2FY15 to 10.5 percent at the end of Q3FY15. The deterioration was across the board for all type of banks except FCBs, but particularly for SOCBs and specialized banks. Unstable macroeconomic conditions and the withdrawal of relaxation in the loan rescheduling standard might have contributed to the accumulation of higher reported non-performing loans. However when compared to previous year’s closing fi gure, the concentration of NPLs among banks has decreased marginally, indicating a positive sign for the banking industry. The non-performing loan (NPL) ratio for NBFIs stood at 7 percent at the close of Q3FY15 compared to previous year’s closing of 5.4 percent.


During Q3FY15, the capital adequacy ratio (CAR) for all banks remained unchanged from previous year’s closing of 10.70 percent marginally surpassing the minimum regulatory requirement of 10 percent. On the other hand the capital adequacy ratio for the NBFIs decreased marginally from 21.2 percent of Q2FY15 and closed at 20.1 percent by the end of Q3FY15. Risk weighted assets (RWA) for the Banks & NBFIs stood at 6461.0 billion and 5116.5 billion respectively.

Among the profi tability measures, both the return on assets (ROA) and return on equity (ROE) decreased by 0.06 and 3.1 percentage points at the end of Q3FY15 with respect to the position of the previous quarter, and reached the level of 0.64 and 5.6 percent respectively. For the NBFI sector the ROA and ROE were1.2 percent and 6.7 percent in the 3rd quarter of FY 15 which is a marked decrease from 2nd quarter results of 2.0 percent and 10.9 percent.

At the end of February in FY 2014-15 internal credit increased by 10.64 percent which was 11.78 percent during the same time period of previous year. Within this time period, credit in private sector grew by 13.61 percent while net credit in public sector had a negative growth of 4.58 percent. At the end of Q3FY15 total outstanding loans and advances of the banking industry stood at Taka 5,481.3 billion. The weighted average advance to deposit ratio (ADR) for all the banks was 70.5 percent at the end of March 2015 which again refl ects the languid investment scenario prevailing in the economy.

Government security rates also fell, including long term bond yields. The rate of 30-day Bangladesh Bank bills decreased to 5.25 percent in June 2015 from 5.9 percent in June 2014. Overall yields on short term treasury bills e.g., 91-day decreased to 5.39 percent in June 2015, from 6.85 percent in June, 2014 and 182-day, 364-day treasury bills rates fell to 6.35 and 6.7 percent respectively at end of June, 2015 from 7.54 and 8.00 percent respectively at the end of June, 2014. Yields on long-term bonds such as 2-year, 5-year, 10-year,

15-year, 20-year BGTB also decreased to 8.5, 9.45, 10.82, 11.4 and 11.97 percent at the end of June 2015 from 8.80, 10.10, 11.67, 11.97 and 12.12 percent respectively in June, 2014.

Central Bank continued its reform activities this year with a core focus on ensuring fi nancial stability and inclusion of the Banks, Non-bank Financial Institutions (NBFIs) and Micro Finance Institution (MFIs) operating in the market. It also increased its emphasis on increasing SME fi nancing and women empowerment. The directive of BB to establish women entrepreneur help desk in every fi nancial institution was an important step towards promoting women entrepreneurship. The Central Bank has also taken strong initiatives to prevent Money Laundering and Terrorist Financing by creating awareness about Anti Money Laundering and Combating Terrorist Finance.

Real Estate Industry Outlook and Possible Future Development

The real estate sector is still going through the recovery stage from the setback it suff ered in 2011. The sector had been performing well from 2004 to 2009 period in all aspects. The price started to increase sharply in 2009-10 due to huge infl ux of undisclosed money in the real estate sector, mostly derived from the capital market. After the crash of stock market in 2010-11, the real estate sector was severely aff ected in terms of expansion, development and turnover. The stagnant situation is continuing for almost four years now. The demand for real estate market is still very high, but the unstable and uncertain economic situation created by volatile political situation has downsized people’s investment in country’s real estate sector. Also the price level, though corrected in recent years by 20-25%, is still considered high for the middle income households. Interest rates of housing loans have come down signifi cantly in recent months. Reduced price of fl ats coupled with lower level of interest rate on housing loan are making some customers interested to invest in property. But


the anticipation of further price correction and uncertainty about political situation are causing large group of these customers to hold back. Developers are off ering lower package to the land owners in their quest to reduce the price of the apartments, but many land owners are not agreeing to their proposals, so number of new projects undertaken by the developers are still on the lower side. They are mostly involved in completing and selling the unsold apartments of the projects they have signed earlier and they are facing diffi culty to match the prevailing market rate or the price the customers are willing to pay compared to the high consideration they paid to the landowners to take these projects.

The private real estate developers have a modest contribution to reduce demand and supply gap in national housing. In spite of inadequate policy support, these real estate developers have been doing their business by mainly catering to the upper and upper-middle income group, although the middle income and low income households are still untapped. With the largest segment of the population belonging to these income groups, the real estate business has a huge growth prospect in this country. But the development of aff ordable housing in our country is still in a nascent stage. Developers are citing lack of demand for not undertaking township projects outside the city area. Prospective buyers on the other hand are blaming lack of community services like good schools, colleges, hospitals, lack of proper transportation facilities for showing less interest to live outside the city area. Real estate market must be expanded to reduce the load on city centre areas. That will help the price to be established at a sustainable level which will be benefi cial for the growth of real estate sector. But for that government initiatives are required to improve the connectivity of the outskirt areas with the city centre.

The Government took some measures to boost real estate sector but these seem to have failed to achieve any fruitful result. The activities of REHAB to redress and rejuvenate the slow moving

real estate sector leave much to be desired. The policies of Government, Central Bank need to be reviewed, analyzed and evaluated to make it more helpful for the real estate sector. The situation may not improve in coming months unless Government comes up with something for the sector like declaring it as productive sector, give customers incentive for investing in local property market, reducing registration cost, allocating land to developers under public-private partnership, reintroducing refi nance scheme for housing loans for middle income group customers, particularly for fi rst time buyers.

Product wise Performance

• Performance of Home Loan Operations

The real estate sector has been suff ering from sluggish growth for a couple of years now. Customers are yet to gain the lost confi dence on the industry and as a result developers are fi nding it very diffi cult to dispatch their large inventory of unsold fl ats. The market is still going through a gradual price correction to bring real estate property within the reach of the middle income group. Factors like political uncertainty, lack of investment growth and poor standard of developers are aff ecting the growth of the industry negatively. Weak customer confi dence is also forcing the prime customer group, the expatriate buyers, to invest in off shore real estates. As a result, the real estate companies have become cash strapped with thousands of unsold ready apartments in their hands which have given rise to soaring non-performing loans (NPL) for the banks investing in commercial real estate.

In light of such a scenario the performance of DBH Home Loan operations has been respectable. Being a housing fi nance specialist DBH has forecasted the situation prudently and focused on maintaining the health of its existing portfolio and strengthening its focus on core retail clientele. The Company’s loan book in housing fi nance grew at a very moderate pace of 8.19 percent to Taka 29.03 billion during the fi nancial year


while keeping gross NPL ratio at the level of 0.30 percent only. During the year, the gross interest income from the housing fi nance portfolio stood at Taka 3,849.82 million. DBH holds an adjustable rate home loan portfolio and the average rate of interest on the home loan book is decreasing in line with the downward shift in the market rate of interest. Even though managing settlements ahead of schedule was a challenge this year, the disbursement fi gures experienced a healthy rise compared to last year and the Company has retained its position as the specialist housing fi nancier with the largest market share in making new disbursements. Total net approvals during the year stood at Taka 7,715.05 million as against Taka 6,834.06 million in the previous year showing a growth of 15.57 percent from last year comparatives. Total disbursement at the end of FY 2014-15 was Taka 7,768.69 million as against Taka 6,582.88 million of preceding fi nancial year. During the year under review, a total of Taka 5,559.21 million was received by way of repayment of principal on loans through monthly installments and redemption ahead of schedule. Gross non-performing loans as of June 30, 2015 have been fully provided for and additionally, as required by Bangladesh Bank, DBH has a loan loss reserve amounting to 1% of standard loans & 5% of special mention accounts.

• Performance of Deposit Portfolio

Over the years DBH has established itself as one of the leading depository institution in the industry. The Company has earned the trust of the clients by providing transparent & quality service. DBH has kept its focus on deposit collection as its main source of funding mechanism. As a result DBH has managed to fund over 80 percent of its home loan operations through deposit. At present the Company off ers a diverse deposit product line including Annual Income Deposit, Monthly Income Deposit, Quarterly Income Deposit, Cumulative Deposit, Flexible Fixed Deposit, Profi t First Deposit, Easy Way Deposit, Children’s Deposit,

Easy Home Deposit, DBH Platinum Deposit. In compliance to the regulations of Bangladesh Bank the minimum tenure of the deposits is three months. These products are targeted towards various customer segments comprising of retail and corporate clientele with almost equal weight on institutional and retail deposits.

At the close of June 30, 2015 the deposit portfolio of DBH stands at Taka 2,4703.12 million with an interest payable worth another Taka 1,139.66 million. As the market shifts downward the rate of interest on the DBH deposit products have also signifi cantly decreased this year.

DBH also provides loan against deposits (LAD) to cater to its customers’ urgent fi nancial need. As of June 30, 2015, the LAD portfolio of DBH stands at Taka 207.76 million.

Recovery

FY 2014-15 has experienced mixed progress in terms of containing the non performing loan (NPL) fi gures of the Financial Industry. At the close of June 30, 2014, the Gross NPL ratio for Banks and NBFIs were 10.80% and 5.40% respectively. Halfway through FY 2014-15, at end of December 31, 2014 the gross NPL ratio for both the sectors improved slightly and stood at 9.70% and 5.30%. However, at the end of 3rd Quarter the amount of aggregate classifi ed loans stood at Taka 546.6 billion for bank which is 10.5% of the total outstanding loans of the banking sector. On the other hand, for NBFIs the amount stood at Taka 27.6 billion which is 7.00% of the outstanding loans of all NBFIs operating in Bangladesh.

Under such circumstances, DBH has shown steady and resilient performance in maintaining asset quality. According to the classifi cation policy of the Central Bank, at close of June 30, 2015 the NPL of the Company has marginally increased to 0.30 percent from 0.22 percent at end of the preceding fi nancial year. While aggregate NPL ratio for both Banks and NBFIs has gone up, DBH has been successful to restrain the increase to a minimum.


Needless to say, this is by far the best fi gure in the fi nancial industry.

Funding Operations

Being one of the largest non-bank depository institutions of the industry, the funding composition of the Company has remained signifi cantly reliant on the deposit portfolio. The deposit products are tailored to meet the diversifi ed needs of our retail and corporate client base. The deposit portfolio of the Company has stood at Taka 24,703.12 million.

The funding of our company comprises of both long term and short term sources of fund to effi ciently manage our cost of fund. Long-term loan portfolio of DBH consists of funds received under Housing Loan refi nance Scheme of Bangladesh Bank worth Taka 3,187.24 million, long term loans received from international lenders like FMO & Triodos Custody B.V. worth Taka 305.65 million and loans sourced from local markets for Taka 846.46 million. Apart from that the shareholder’s contribution in the funding mix is 3170.92 million, which is almost 10.00 percent of total fund. The Company is continuously striving to source diversifi ed avenues of funding to minimize its cost as well as asset-liability maturity & interest rate mismatch in the balance sheet.

The funding status of DBH as of June 30, 2015 is presented below:

Source Amount in Million Taka

Deposits 24,703.12

Long term loans 4,339.35

Equity 3,170.92

Treasury Operations

In DBH, Treasury acts as a catalyst between the core functions of housing fi nance & deposit mobilization. Over the years the treasury wing of

DBH has evolved from a day-to-day fund managing unit to a core contributor in strategic decision making related to asset liability mismatch (ALM) and interest rate risk (IRR) mismatch management through in-depth market forecasting, internal liquidity projection and product re-pricing subject to regulatory constraints.

In FY 2014-15, the Central Bank maintained its balanced monetary policy stance designed to foster private sector growth by channeling funds into productive sectors with a view to supporting the attainment of the real GDP growth objective while keeping it consistent with the targeted 6.50 percent average infl ation rate for FY 15. Increased remittance infl ow and relatively slower growth of investment led to a highly liquid market. So, the Central Bank was faced with the challenges of managing this excess liquidity. Weighted average interest rate of deposits and advances had gradually gone down during the year and interest rate spread decreased further i.e., 5.31% in June 2014 to 4.87% a year later.

As there was suffi cient liquidity in the market, the call money rates were also lower. From a weighted average rate of 6.25 percent in June 2014 it came down to 5.79 percent at the end of June 2015. During the FY 15 the highest weighted average of interest rate for call money was 8.57 percent during January 2015. Understandably, the treasury department of DBH also had to optimize the funding mix ensuring maximum utilization of low cost funds to operate on a thin margin in a liquid market. By setting cost minimization as the key objective, the treasury wing intensifi ed its position from long to short to access low cost fund from the money market to reduce overall cost of fund and enhance treasury income. The treasury department contributed a signifi cant portion of the interest income through investment activities during the FY 15. Throughout the year the treasury department maintained a well-balanced liquidity position of the company by adhering to the rules and regulations of the Central Bank.


Investments in Securities

The capital market of the country showed positive indications of rejuvenating in this fi nancial year. The year ended with DSEX index at 4,583.11 on June 30, 2015 which stood at 4,480.52 at the end of the previous year. The market reached its highest point with DSEX index 5,334.04 on October 2014. In accordance to the market situation DBH has continued to maintain a cautious investment policy. The capital market portfolio of the Company stands at Taka 302.41 million as of June 30, 2015.

In addition to that, the Company also invested Taka 50.00 million in the redeemable preference share of United Capital Limited and Taka 12 million in non-marketable securities. The company has earned taka 12.99 million from this sector as on June 30, 2015.

Human Resources

DBH believes that its best investment is in the human resources, as the Company believes that human resource is the edifi ce on which the Company’s performance and productivity are standing on. As human resources are one of the key success factors of the Company, DBH maintains its policy of recruiting the very best and implementing continuous programs to develop, motivate and retain its talented and capable human resources.

In a bid to keep up with the pace of ever changing business world with regard to altering business processes, embracing technological changes and meet up new compliance and regulatory requirements DBH undertakes training and development plan for its employees and arranges in-house functional training sessions as well as sends them over for attending public training programs. Employees also attended training

programs overseas on diff erent personal and functional development programs for increasing their levels of skills and competencies.

DBH’s commitment towards maintaining a fair and healthy working atmosphere binds it upon keeping an unbiased/impartial approach in all its scope that is, free from all kinds of discrimination based on gender, age, race, national origin, religion, marital status, or any other basis not prohibited by law. This maximizes effi ciencies at tasks and helps employees reach their full potentials.

At DBH, eff ective internal communications and free fl ow of ideas, open door, fairness, commitment, teamwork and highest standards of professional excellence and integrity are always appreciated.

Since its human resources give DBH a clear competitive edge, DBH always aspires to hire the best of the people with diverse backgrounds. Thus the focus always remains on fostering talent, unleashing potential and providing long-term career growth. Career development at DBH is solely based on merit, performance and productivity.

Information Technology

Information Technology (IT) has become a key component of today’s business strategy and is playing an imperative role in business operation. Information & Communication Technology (ICT) infrastructures and innovative software solutions have become the driving force of corporate business. From the inception, DBH is aspiring to achieve operational excellence through use of IT in an optimized and cost-eff ective manner and the whole business processes/operation is now automated through a robust centralized software within a secured computer network system.


The centralized software is maintaining crucial business data in an effi cient manner and produces reports as required for daily business need and decision making. As a result, an automated way of work is defi ned and executed through IT systems with accuracy, authenticity & optimum performance.

In the fi nancial year, a number of processes/modules of the centralized software system has been enhanced as well as new modules have been implemented which improved overall performance signifi cantly. Some of the enhanced processes/modules are - document/information checklist validation for deposit creation, maker-checker validation for deposit encashment, call center solution for recovery etc. Moreover, software requirement management module was improved and technical documentation was done to meet compliance. IT security systems, disaster recovery, data processing and redundancy, comprehensive data loss prevention programs were also improved. Power backup system was also upgraded for uninterrupted supply (by ATX switch) and longer time backup. Business Continuity Plan (BCP), Disaster Recovery Plan (DRP) has been formulated and IT Security policy has been revised. Above accomplishment ensures that the information system is functional, secured and compliant.

A highly motivated, diverse and innovative team is performing to develop, maintain and secure the existing system regularly as well as to implement new/upgraded systems when required.

Codes and Standards

The Company has adopted various codes, standards and policies set out by Bangladesh Bank and Bangladesh Securities and Exchange Commission including inter alia Know Your Customer (KYC) Guidelines, Anti Money Laundering Guideline, Asset Liability Management

Guideline, Directors Code of Conduct, HR Policies, IT Policies and Treasury Manual etc.

The Company has the mechanisms in place to review and monitor adherence to these codes and standards and to ensure reporting and compliance as required.

Credit Rating

Delta Brac Housing Finance Corporation Limited with its strong fundamentals has earned the highest credit rating award for the 9th (Ninth) consecutive year. Credit Rating Agency of Bangladesh (CRAB) reaffi rmed AAA in the long term and ST-1 in the short term rating of Delta Brac Housing Finance Corporation Limited in its latest entity rating done based on the Company’s year end fi nancials of 2013-2014.

Key Operating and Financial data of at least last preceding 5 (fi ve) years

Key operating and fi nancial data of last preceding 5 (fi ve) years is shown under the heading of Operational Highlights and Financial Highlights in the page no. 21 of this annual report. Financial Highlights as required by Bangladesh Bank is also given in page no. 22 of this report.

Contribution to National Economy

At DBH we believe that we have some responsibilities to the development of the country where we operate our business and to the society where we belong. As a fi nancial institute, DBH contributes to the economic prosperity by providing fi nancial products and services to housing sector. Our total credit exposure as on June 30 amount to Tk. 29,248 Million. We have extended loan to around 15,621 customers to meet their housing need, which is one of the basic needs of people.


DBH contributes to the national exchequer in the form of income tax, VAT & excise duty. During the year 2014-15 company’s contribution to the national exchequer is given below.

Taka in Million

Particulars 2014 -15 2013 -14

Income Tax paid on company’s income 700.00 601.11

Tax collected at source on behalf of Government

290.64 252.44

Value Added Tax (VAT) 21.88 21.09Excise Duty 21.90 22.92

Total 1,034.42 897.56

Creating employment has a vital impact on the economy and DBH employed as many as 214 employees as on June 30, 2015. Effi cient workforce is very important for the organization as well as for the country. During the year 2014-15, DBH has paid Tk. 241.16 million as salaries and allowances to its employees.

Contribution to the society

DBH’s responsibilities to the society are manifested in its activities. As a responsible corporate citizen DBH continuously promotes ownership of housing, wealth creation and also the improvement of the underprivileged and weaker section of the society.

The Board of Directors in its 81st Meeting held on February 23, 2015 approved the Corporate Social Responsibility policy of the Company in line with the Bangladesh Bank Guideline on CSR with a view to engaging the institution into a broad range of direct and indirect CSR activities including humanitarian relief and disaster response as well as widening advancement opportunities for disadvantaged population segments with support in areas of healthcare, education and training as well as greening initiatives etc.

The Board further, in its 83rd Meeting held on August 13, 2015 approved the allocation of an amount of Tk. 6.5 million as CSR Fund, to carry out various CSR activities during the period of 2015-2016 as per approved guidelines of DBH’s CSR Policy.

Contribution during the year

DBH consider the society as an extended family. We are always at their side when they are in distress and in need of our help. We distributed 2000 (two thousand) blankets at a cost of Tk. 5,30,500.00 to the cold hit people of the Country through the exclusive channel of BRAC.

Further, DBH contributed an amount of Tk. 5,00,000.00 to the development fund of the Liberation War Museum, Bangladesh which was established to commemorate heroic struggle of Bengalee nation for democracy and national rights.

Highlights on Financial Performance

The comparatives on the fi nancial performance of the Company for twelve-month period to June 30, 2015 are presented below:

(Figures in Million Taka)

Particulars 30-Jun-15

30-Jun-14

Operating revenue 4,569 4,781

Interest expenses 2,785 3,071

Operating expenses 346 316

Profi t before provisions 1,438 1,395

Profi t before tax 1,259 1,199

Net profi t after tax 685 607

The operating profi t for the period was Taka 1,437.76 million compared to Taka 1,394.71 million of same period of last year refl ecting a growth of 3.09%. The Company has made PBT of Taka 1,259.39 million for the reviewed period


ended as on June 30, 2015 as against the previous year’s fi gure of Taka 1,199.19 million with a growth of 5.02%.

Operating revenue of the Company decreased by 4.45% over the last year’s fi gure of Taka 4,781.43 million to Taka 4,568.83 million in twelve-month of FY2014-15. Interest income has gone down by 4.57 % from the previous year whereas fees income increased by 6.01%. On the other hand interest expense has decreased by 9.30% to Taka 2785.29 million when compared to last year’s fi gure of Taka 3071.02 million.

As a result, net operating income of the Company has increased by 4.28% from corresponding period of last year. The net operating income stood at Taka 1,783.54 million compared to last year’s fi gure of Taka 1,710.41 million.

Awards and Recognitions

Annual Report 2013-2014 recognized by ICMAB:

ICMAB Best Corporate Awards-2014 was declared on 20 January 2015 where a total of 66 corporate entities won the awards for their outstanding performance especially in maintaining corporate governance.

Delta Brac Housing Finance Corporation Limited (DBH) was awarded the ‘Best Corporate Awards- 2014’ in the Non-Banking Financial Institution category and won the 3rd prize.

National Award 2014 for Best Presented Annual Report by ICAB:

The Institute of Chartered Accountants of Bangladesh (ICAB) introduced the National Award for Best Presented Annual Report annually since 2001 and they have given their 14th National Award for Best Presented Annual Report-2014 in 10 separate categories for preparing and publishing annual reports 2013 with disclosure of “maximum relevant information in a more transparent way”.

Delta Brac Housing Finance Corporation Limited, one of the top non-bank fi nancial institution was awarded the prestigious ‘The Best Presented Annual Report for the year 2013’ and received the Certifi cate of Appreciation as a token of recognition of excellence in the fi nancial services.

Corporate and Financial Reporting Framework

The Members of the Board, in accordance with the Bangladesh Securities & Exchange Commission’s Notifi cation no. SEC/CMRRCD/2006-158/134/Admin/44 dated August 7, 2012; confi rm compliance with the fi nancial reporting framework for the following:

• The fi nancial statements prepared by the Management of DBH, present fairly its state of aff airs, the result of its operations, cash fl ows and changes in equity.

• Proper books of account of the issuer company have been maintained.

• Appropriate accounting policies have been consistently applied in preparation of the fi nancial statements and that the accounting estimates are based on reasonable and prudent judgment.

• International Accounting Standards (IAS)/ Bangladesh Accounting Standards (BAS)/ International Financial Reporting Standards (IFRS)/ Bangladesh Financial Reporting Standards (BFRS), as applicable in Bangladesh, have been followed in preparation of the fi nancial statements and any departure there from has been adequately disclosed.

• The system of internal control is sound in design and has been eff ectively implemented and monitored.

• There are no signifi cant doubts upon the issuer company’s ability to continue as a going concern.


Going Concern

The fi nancial statements of the Company have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Board of Directors of DBH has made annual assessment about whether there exist any material uncertainty which may cast signifi cant doubt upon the Company’s ability to continue as a going concern, including review of budget and future outcome of inherent uncertainties in existence.

Based on the diff erent indications, Directors feel it appropriate to adopt going concern assumptions and no material uncertainty exists in preparing the fi nancial statements. A report on going concern policy is included in the annual report in page no. 81.

Board Meetings and Attendance by the Directors

Attendance by the Directors in the Board are summarized and given in Annexure-i and the fees paid to them for attending the Board Meeting during the year is given in Annexure-ii of this report.

Shareholding Pattern

Shareholding patterns of the Company as at the end of the year 2014-2015 is shown in Annexure-iii of this report.

Proposed Dividend

The Board of Directors at the time of considering the annual accounts have recommended @ 30% cash dividend to be paid to the shareholders out of profi t of the year 2014-15, which is to be approved by the shareholders in the forthcoming AGM.

Directors’ Appointment & Re-appointment

The present Directors of the Company are named in pages 9 to 17 of this report.

In accordance with the Article No. 106 of the Articles of Association of DBH, the following Directors will retire in the 19th Annual General Meeting by rotation and being eligible for re-election, they are seeking re-election to the Board.

• Ms. Mehreen Hassan, Bar-at-law (representing DLIC)

• Mr. Swapan Kumar Sarkar, FCA (representing DLIC)

Article 102 of the Articles of Association also requires that any Director appointed by the Board to fi ll the casual vacancies since last Annual General Meeting shall retire in the next Annual General Meeting. Accordingly, the following Director shall retire in the forthcoming Annual General Meeting and being eligible, he is seeking re-election.

• Dr. A M R Chowdhury (representing BRAC)

In order to comply with the Bangladesh Securities and Exchange Commission’s (BSEC’s) Corporate Governance Guidelines (CGG) dated August 7, 2012 the Board of DBH have re-appointed the existing Independent Director, Mr. M I Chowdhury for a further term of 3 (three) years. As other Independent Director, Ms. Rizwana Hasan was not eligible for re-appointment, in her place the Board appointed Dr. A K A Mubin, former Secretary of the Government of Bangladesh for a term of three years.

Pursuant to the Clause 1.2 (iii) of the CGG, appointment/re-appointment of the following Independent Directors shall be approved by the shareholders in the forthcoming AGM.

• Mr. M I Chowdhury • Dr. A K A Mubin


Disclosure of information in case of the appointment /re-appointment of the Directors

a) Brief resume of the Directors are included in page nos. 9 to 17 of this Annual Report

b) Nature of the expertise of the Directors are also disclosed in the brief profi les

c) Name of the Directors and entities in which they have interest as Directors are also disclosed in the brief profi les as well as in the notes no. 38.1 of the Financial Statements.

Appointment of Auditor

Messrs A. Qasem & Co., Chartered Accountants have been serving as the auditor of the Company for the last 3 (three) consecutive years and will retire in the forthcoming AGM. Since, they are not eligible for re-appointment for the fi nancial year 2015-16 as per BSEC as well as Bangladesh Bank’s regulations, consequently the Board of Directors have recommended to appoint M/S. S. F. Ahmed & Co., Chartered Accountants and Bangladesh Bank has also accorded its consent in this regard. Finally the matter will be placed before the shareholders in the AGM for approval.

Corporate Governance

As a listed housing fi nance company (DBH) with 19 years of compliant history, DBH has a strong institutional framework to meet the regulatory requirement of Corporate Aff airs. DBH’s experienced Board maintains an overview on the Company through the Supervisory Committees. In addition to bringing valuable perspective to the Board, DBH’s independent directors contribute meaningfully through their roles within the two committees ‒ namely the Audit Committee and the Executive Committee.

DBH understands sound corporate governance and its importance in retaining and enhancing investors trust. The Company’s commitment to values and performance is driven by transparency

and integrity, which goes a long way in achieving the top position. It adheres to the core values of credibility and accountability to serve its stakeholders with passion and commitment. Its values and transparent processes act as a catalyst in growth.

Pursuant to the BSEC’s Corporate Governance Guidelines, the following statements are appended as part of this Annual Report:

(i) Audit Committee Report to the Shareholders

(ii) Statement on Financial Statements by Chief Executive Offi cer (CEO) and Head of Finance

(iii) Report on the Corporate Governance

(iv) Certifi cate regarding compliance of the conditions of Corporate Governance Guidelines.

Acknowledgement

The Board of Directors of the Company would like to extend their sincere thanks and gratitude to its stakeholders for assistance and guidance from time to time. The Directors of the Company acknowledge their gratitude to its customers, fi nanciers, Bangladesh Bank, Bangladesh Securities & Exchange Commission (BSEC), Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE) and other regulatory authorities for their guidance and support to the Company and the co-operation extended by the Auditors, and the devoted eff orts put in by the Company’s employees at all levels to uphold the Company’s performance.

For and on behalf of the Board of Directors.



Directors’ Meeting & Attendance

Annexure-i• During the fi nancial year under reporting total four Board Meetings were held and the attendance of the Directors are noted below:

Name of Directors Nominated byTotal Meeting

Meeting Attended

Change during 2014-2015

Date of Board Acceptance

JoiningNomination withdrawn

Mr. Faruq A Choudhury, Chairman BRAC 4 3 - -

Mr. Nasir A. Choudhury Green Delta Insurance Company Ltd. 4 4 - -

Mr. Rajeev Sardana, FCA HDFC Investments Ltd. 4 2 - -

Mr. A Z Mohammad Hossain Green Delta Insurance Company Ltd. 4 3 - -

Ms. Mehreen Hassan, Bar- at- Law

Delta Life Insurance Company Ltd. 4 3 - -

Mr. Swapan Kumar Sarkar, FCA

Delta Life Insurance Company Ltd. 4 2 - -

Mr. Shameran Bahar Abed, Bar- at- Law BRAC 2 2 - 23-02-2015

Ms. Adeeba Rahman, ACII-Life Delta Life Insurance Company Ltd. 4 4 - -

Dr. A M R Chowdhury BRAC 1 0 23-02-2015 -

Mr. M I Chowdhury Independent Director 4 4 - -

Ms. Syeda Rizwana Hasan Independent Director 4 2 - -


Directors’ Remunerations

Annexure-ii• The Statement of remuneration paid to the Directors during the fi nancial year under reporting are noted below:

Name of DirectorsBoard Executive Committee Audit Committee Total Fees

PaidAttendance Fees Attendance Fees Attendance Fees

Mr. Faruq A Choudhury, Chairman 3 15,000.00 0 0 3 15,000.00 30,000.00

Mr. Nasir A. Choudhury 4 20,000.00 0 0 4 20,000.00 40,000.00

Mr. Rajeev Sardana, FCA 2 10,000.00 0 0 0 0 10,000.00

Mr. A Z Mohammad Hossain 3 15,000.00 0 0 4 20,000.00 35,000.00

Ms. Mehreen Hassan, Bar- at- Law 3 15,000.00 1 5,000.00 0 0 20,000.00

Mr. Swapan Kumar Sarkar, FCA 2 10,000.00 0 0 4 20,000.00 30,000.00

Mr. Shameran Bahar Abed,Bar- at- Law 2 10,000.00 0 0 0 0 10,000.00

Ms. Adeeba Rahman, ACII-Life 4 20,000.00 1 5,000.00 0 0 25,000.00

Dr. A M R Chowdhury 0 0 0 0 0 0 0

Mr. M I Chowdhury 4 20,000.00 0 0 4 20,000.00 40,000.00

Ms. Syeda Rizwana Hasan 2 10,000.00 1 5,000.00 0 0 15,000.00

Total - 1,45,000.00 - 15,000.00 - 95,000.00 2,55,000.00


Pattern of Shareholdingsas on 30th June 2015

Annexure-iii(i) Shareholding Status of Sponsors/ Promoters & Pre-IPO Shareholders:

Name of the Shareholders No. of Share(s) held Percent (%)

BRAC 21,339,630 18.39

Delta Life Insurance Company Limited 20,456,500 17.63

Green Delta Insurance Company Limited 17,761,727 15.31

HDFC Investments Limited 14,183,801 12.22

International Finance Corporation (IFC) 14,183,801 12.22

Mr. Faruq A Choudhury 23 0.00

Dr. Salehuddin Ahmed 23 0.00

(ii) Shareholding status of Directors/CEO/CS/CFO/Head of Internal Audit & their spouses & minor children:

Name of the Directors Nominated by No. of Share(s) held

Percent (%)

Mr. Faruq A Choudhury, Chairman BRAC 23 0.00Mr. Nasir A. Choudhury Green Delta Insurance Company Ltd. - -Mr. Rajeev Sardana, FCA HDFC Investments Ltd. - -Mr. A Z Mohammad Hossain Green Delta Insurance Company Ltd. - -Ms. Mehreen Hassan, Bar- at- Law Delta Life Insurance Company Ltd. - -Mr. Swapan Kumar Sarkar, FCA Delta Life Insurance Company Ltd. - -Ms. Adeeba Rahman, ACII-Life Delta Life Insurance Company Ltd. - -Dr. A M R Chowdhury BRAC - -Mr. M I Chowdhury Independent Director - -Ms. Syeda Rizwana Hasan Independent Director - -

Name of the Executives Status No. of Share(s) held

Percent (%)

Mr. Q. M. Shariful Ala Managing Director & CEO - -Mr. Syed Aminul Islam SVP & Head of Finance - -Mr. Khandaker Satil Sayeed SAVP & Head of Internal Compliance - -Mr. Jashim Uddin, FCS SAVP & Company Secretary - -


(iii) Top fi ve salaried persons other than CEO, CFO, CS & HIA

Name of the Executives Status No. of Share(s) held

Percent (%)

Mr. Nasimul Baten EVP & Head of Operations - -

Mr. Hassan I. Yussouf EVP & Head of Information Technology - -

Mr. A. K. M. Tanvir Kamal EVP & Head of Credit - -

Mr. Tanvir Ahmad EVP & Head of Human Resources - -

Mr. Saiyaf Ejaz SVP and Head of Recovery & Administration - -

(iv) Shareholders holding 10 % or more voting interest in the Company:

Name of the Shareholders No. of Shares held Percent (%)

BRAC 21,339,630 18.39

Delta Life Insurance Company Limited 20,456,500 17.63

Green Delta Insurance Company Limited 17,761,727 15.31

HDFC Investments Limited 14,183,801 12.22

International Finance Corporation (IFC) 14,183,801 12.22


DBH rated the highest AAA

for the 9th consecutive year.

Credit Rating Agency of

Bangladesh (CRAB) handed

over the Credit Rating

Report to Q. M. Shariful Ala,

Managing Director & CEO.

Honorable Finance Minister

A M A Muhith handing

over ICMAB Best Corporate

Award 2014 trophy under

Non-Banking Financial

Institutions category to

our Head of Finance Syed

Aminul Islam.

Faruq A Choudhury,

Chairman of Delta

Brac Housing Finance

Corporation Ltd. (DBH)

addressing the 18th

Annual General Meeting

of the Company.

Events Highlights

Honorable Shareholders

of DBH participating

in the 18th AGM of the

Company.

DBH donated blankets

for the cold wave aff ected

people. Md. Akramul Islam,

Director, BRAC and Sasi

Kumar, Head of Operations,

Ayesha Abed Foundation,

Syed Aminul Islam, Head

of Finance, Jashim Uddin,

Company Secretary and

Imtiaz Elahi, Manager Brand

& Communication of DBH

were present at the function.

Faruq A Choudhury,

Chairman and

Q. M. Shariful Ala,

Managing Director &

CEO attending the 18th

AGM of the Company.



Report on CorporateGovernance DBH’s Philosophy on Corporate Governance

Corporate governance is based on the principles, systems and practices through which the Board ensures transparency, fairness and accountability in the relationship of a Company with all its stakeholders, viz. shareholders, creditors, depositors, regulators, government agencies, employees, among others. Accordingly, corporate governance is making all the necessary disclosures and decisions, accountability and responsibility towards various stakeholders, complying with all the applicable laws and a continuous commitment of conducting business in a transparent and ethical manner.

At DBH, corporate governance philosophy encompasses not only regulatory and legal requirements, but also other practices aimed at a high level of business ethics, eff ective supervision and enhancement of value for all stakeholders’. We believe that a Company not only has legal, contractual and social responsibilities, but also has obligations towards its non-shareholder stakeholders such as bankers, regulators, government agencies, employees, investors, creditors and customers etc. The Company ensures that all its stakeholders have an access to clear, adequate and factual information on all matters of the Company. The Company is committed towards maintaining the highest standards of governance and believes in adopting best practices and integrity for eff ective corporate discipline. It promotes accountability of its management and the Board of Directors towards its stakeholders and acknowledges its responsibilities towards them for creation and safeguarding their wealth.

Board of Directors

The Board of Directors of the Company plays a key role, as they oversee the functioning of the organization and ensures that it continues to operate in the best interest of all the stakeholders. Thus, the Company strives to keep its Board well-informed, independent and actively involved in the important decision making process pertaining to the Company.

The Board while performing its fi duciary duties recognizes its responsibilities towards its members and other stakeholders to uphold the highest standards in all matters concerning the Company and for the purpose empowers responsible offi cials to implement its broad policies and guidelines. The Company’s business is conducted by its employees under the directions of the Managing Director and overall supervision of the Board.

The Board of DBH comprises of 10 (ten) members of which eight are Non-Executive Nominated Directors and two Independent Directors (the eminent personalities in their respective fi eld). The goal has been to form a Board, which is cohesive and has the expertise for quick and informed decision making.

Code of Conduct

The Company had framed and adopted a Code of Conduct in accordance with the condition no. 1.2 (v) of the Bangladesh Securities and Exchange Commission’s (BSEC’s) Corporate Governance Guidelines 2012, which was approved by the Board of Directors in its 70th Meeting held on December 27, 2012. With the objective of


enhancing the standards of governance, the Company also adopted separate codes for the members of management and executives of the Company.

For the year under review, all directors and members of senior management have affi rmed their adherence to the provisions of the respective codes.

Changes in the Board

BRAC, a Sponsor Shareholder of the Company had nominated Dr. A M R Chowdhury in the vacant position of their nominated Director Mr. Shameran Abed, who was subsequently appointed as Director by the Board on February 23, 2015.

Ms. Rizwana Hasan, Independent Director has completed her 3 (three) years term and being joined the Board of one of the Sponsor of DBH and hence not eligible for acting as an Independent Director of the Company. The Board has appointed Dr. A K A Mubin in her place on September 29, 2015.

Board Meetings

The Company holds at least four Board Meetings in a year, one in each quarter inter-alia to review the fi nancial results of the Company. The gap between the two Board Meetings does not exceed three months. Apart from the four scheduled Board Meetings, additional Board Meetings are also convened to address the specifi c requirements of the Company. Urgent matters are also approved by the Board by passing Resolutions through circulation. During the year under review 4 (four) meetings of the Board were held.

Board Committees

There are two committees constituted by the Board Members to assist the Board in discharging its responsibilities ‒ the Audit Committee and the Executive Committee. The Board at the time of constitution of each committee fi xes the terms of

reference for each committee and also delegates power from time to time. The minutes of the meetings of both the committees are circulated to the Board for its information.

Audit Committee

The primary role of the Audit Committee is overseeing the fi nancial reporting process and disclosure of fi nancial information, reviewing the fi nancial statements before submission to the Board, reviewing adequacy of internal control systems and reviewing fi ndings of internal investigations besides recommending appointment/ removal of statutory auditors and fi xing their remuneration.

The Audit Committee was last reconstituted on September 29, 2015 which is comprised of Mr. M I Chowdhury as the Chairman, Mr. Faruq A Choudhury, Mr. Nasir A. Choudhury, Mr. A Z Mohammad Hossain, and Mr. Sawpan Kumar Sarkar, FCA as its members. A separate report on the activities of the Audit Committee is attached in the page no. 66 to 68 of this report.

Executive Committee

The Executive Committee is authorized to review all the proposals of loans and advances above authority delegated to the Managing Director & CEO.

The Executive Committee was last reconstituted on February 23, 2015 and the members are: Ms. Mehreen Hassan as its Chairperson, Ms. Adeeba Rahman, Dr. A M R Chowdhury, and Mr. Q. M. Shariful Ala, Managing Director & CEO as its members.

Role of Independent Directors

The Independent Directors play a key role in the decision-making process of the Board as they involve in the overall strategy of the Company and oversee the performance of management. The Independent Directors are committed to act


in what they believe is in the best interest of the Company and its stakeholders.

The Independent Directors bring a wide range of experience, knowledge and judgment as they draw on their varied profi ciencies in economics, fi nance, management, law and public policy. This wide knowledge of both, their fi eld of expertise and boardroom practices helps to foster varied, unbiased, independent and experienced perspectives. The Company benefi ts immensely from their inputs in achieving its strategic direction.

The Head of the Audit Committee is an Independent Director. The Executive Committee also comprises with one independent director. These committees function within the defi ned terms of reference in accordance with the Acts, Guidelines and the Listing Regulations and as approved by the board, from time to time.

Role of the Chairman

The Chairman serves as the primary link between the Board and Management, and works with the CEO and Company Secretary to set the agenda of the Board Meetings. He provides leadership to the Board and ensures that the Board works eff ectively and discharges its responsibilities effi ciently.

Chairman & Managing Director/CEO of the Company are diff erent persons

Chairman of the Board and Managing Director of the Company are diff erent persons with diff erent roles and responsibilities, defi ned by the Board and thereby preventing unregulated powers of decision making on a single hand. The Chairman is a Non-executive Director while the Managing Director is an Executive Director.

Role of the Managing Director & CEO

The Managing Director & CEO is the key person and is responsible for running the business of the Company. He is also responsible for formulating as well as implementing Board strategy and

policy. The Managing Director is responsible for establishing and executing the Company’s operating plans that is necessary to achieve the Company’s objectives. He has the overall control on the Company’s day-to-day aff airs and is accountable to the Board for the fi nancial and operational performance of the Company.

Delegation of Authority

There is clearly spelled out delegation of authority in sanctioning loan as well as the operational and capital expenditure with specifi c task authority relationship. The board has empowered responsible persons to implement its broad policies and guidelines and has set up adequate review processes.

Role of the Company Secretary

Company Secretary is responsible for advising the Board through the Chairman on all governance matters. He is also responsible for ensuring proper information fl ow with the Board and its Committees and between the management and the non-executive directors. He is also acting as bridge between the regulators/stakeholders and the Company.

Internal Control and Compliance

The Company’s internal control system was commensurate with its size and business nature. The system minimized operational risks through eff ective control, systemic review and on-going audit. The internal auditors undertook a comprehensive audit of all functional areas and operations, their fi ndings referred to the Audit Committee of the Board.

The Company internalized its legal and technical appraisal functions to ensure optimum control. The Company’s multi-level authorization structure ensured that higher exposure levels were duly authorized by personnel and committees with requisite experience and authority. Training programs and guidelines helped implement linkage between goals and operations.


The Board has ultimate responsibility for establishing an eff ective system of internal control. The internal control system holds all business risks, including fi nancial, operational and strategic risks. To mitigate all the risks as well as to establish control environment, the board holds its meeting regularly with comprehensive agenda dealing with all major aspects of business. There is an internal control and compliance department directly reporting to the Board Audit Committee which looks after compliance with the organizational policies by diff erent departments.

DBH made relevant mandatory disclosure in its fi nancial statements under the regulatory framework, including compliance with the provisions of International Financial Reporting Standards (IFRS) as adopted in Bangladesh, besides that it submits all the reports/statements regularly, which are required to submit to the regulators as well as the other stakeholders of the Company. However, a separate report on Internal Control is given in page no. 64 and 65 of this report.

Role of the Head of Internal Control & Compliance

The head of Internal Control and Compliance is responsible for reporting to the Board Audit Committee regarding deviations from accounting and internal control system. He is also leading the internal audit team of the Company.

Risk Management

The Company always concentrates on delivering high value to its stakeholders through appropriate tradeoff between risk and return. A well structured and proactive risk management system is in place within the Company to address the risks relating to credit, market, liquidity and operations. Details of the Risk Management are described at notes 2.28 of the Financial Statements in the page no. 100 of this report.

Accounting Standards

The Company has complied with the applicable Accounting Standards. The fi nancial statements present fairly, in all material respects and comply with the Financial Institution Act 1993, the Companies Act 1994, the Securities and Exchange Rules 1987 & other applicable laws and regulations.

Secretarial Standards

The Company has complied with the applicable Secretarial Standards notifi ed by The Institute of Chartered Secretaries of Bangladesh.

Related Party Transactions

Transactions with related parties are made on arm’s length basis and are in the ordinary course of business. Detailed transactions with related parties are described at notes- 36 of the Financial Statements in the page no. 119 of this annual report.

Auditors Certifi cate on Corporate Governance

The Company has complied with all mandatory requirements of Corporate Governance Guidelines as enumerated in the Notifi cation No. SEC/CMRRCD/2006-158/134/Admin/44 dated 7 August 2012 and its subsequent amendments by Bangladesh Securities and Exchange Commission. Mr. S. Abdur Rashid FCS, Chartered Secretary in Practice has certifi ed that the Company has complied with the conditions of Corporate Governance as stipulated under the Corporate Governance Guidelines which is annexed in the page no. 63.

Statement of CEO and the Head of Finance regarding Financial Statements

A separate statement as to the fairness and presentation of the Financial Statements of the Company is given in page no. 83 of this report.


Annual General Meeting (AGM)

DBH holds General Meeting of shareholders once a year and the Company ensures eff ective interaction with the shareholders at the Annual General Meeting. The Directors pay special attention in answering the various queries raised by the shareholders at the Annual General Meeting.

Resolutions passed at the previous AGM i.e. 18th Annual General Meeting

Date & Time: November 25, 2014 at 11:00 AM Venue: The Eden Ball Room of Hotel Amari, House- 47, Road- 41, Gulshan-2, Dhaka-1212.

Resolutions passed by the shareholders:

• Financial Statements for the year ended June 30, 2014.

• Dividend @ 25% cash.

• Re-election of Directors, named Mr. Faruq A. Choudhury, Mr. A Z Mohammad Hossain, Mr. Rajeev Sardana and Ms. Adeeba Rahman.

• Appointment of M/s. A. Qasem & Co., Chartered Accountants as external auditor of the Company.

General Information for the Shareholders

The Company’s fi nancial results and offi cial news releases are also displayed on the company’s website and on the websites of the Dhaka Stock Exchange and Chittagong Stock Exchange and the news required to publish in the daily newspapers are also published accordingly.

Redressal of Investors complaints

Corporate Aff airs Department of DBH is engaged to redress the complaints of the Shareholders and

Investors’ related to transfer and transmission of shares, non-receipt of annual reports, dividends and other share related matters. The department also observes the monthly status of the number of shares in physical as well as dematerialized form.

Going Concern

The Board is satisfi ed that the Company has adequate resources to continue its business for the foreseeable future and consequently considers it appropriate to adopt the going concern basis in preparing the fi nancial statements.

Shareholding Pattern of the Company as on 30th June 2015

On the basis of shareholders types:

Group Name No. ofShareholder(s)

No. ofShare(s)

Percentage (%)

Sponsors/ Promoters & Pre-IPO Shareholders (Local) 5 59,557,903 51.32

Sponsors/ Promoters & Pre-IPO Shareholders (Foreign) 2 28,367,602 24.45

General Public 2002 3,624,524 3.12

Financial Institutions & Other Companies 115 10,791,201 9.30

Foreign Investors 14 13,708,145 11.81

Total : 2138 116,049,375 100.00


Distribution schedule of each class of equity security setting out of the number of holders and percentage:

Shareholding Range Number of Shareholder(s) No. of Shares Percentage(%) 1 - 500 883 182,394 0.16 501 - 5000 1053 1,798,522 1.55 5001 - 10000 76 546,949 0.47 10001 - 20000 51 679,000 0.59 20001 - 30000 17 428,418 0.37 30001 - 40000 9 317,399 0.27 40001 - 50000 7 340,587 0.29 50001 - 100000 10 795,063 0.69 100001 - 1000000 22 7,255,006 6.25 1000001 to above 10 103,706,037 89.36

Total : 2138 116,049,375 100.00

Having reviewed the BSEC’s Corporate Governance guideline as last amended on July 21, 2013, the Company’s Board issued and signed their declaration of Compliance, a statement of which is given in this report.

General Public 24.23%

DLIC 17.63%

BRAC 18.39%

GDIC 15.31%

IFC 12.22%

HDFC 12.22%

ShareholdingPattern


Annexure- A

Status of compliance with the conditions imposed by the Commission’s Notifi cation No. SEC/CMRRCD/2006-158/134/Admin/44 dated 7 August 2012 issued under section 2CC of the Securities and Exchange Ordinance, 1969:

(Report under Condition No. 7.00)

Condition no. Title

Compliance statusas on June 2015

RemarksComplied Not

Complied1.0 Board of Directors:1.1 Board’s Size: Board members shall not be less than 5 (Five)

and more than 20 (Twenty)

1.2 Independent Director: 1.2 (i) Independent Director: At least 1/5th

1.2 (ii) For the purpose of this clause “independent director” means a director:-1.2(ii) a Independent directors do not hold any share or hold less than

one percent (1%) shares

1.2(ii) b Independent directors do not connected with the company’s sponsor or director or shareholder who holds 1% or more shares

1.2(ii) c Independent directors do not have any other relationship, whether pecuniary or otherwise, with the company or its subsidiary/associated company

1.2(ii) d Independent directors are not the members, directors or offi cers of any stock exchange

1.2(ii) e Independent directors are not the members, directors or offi cers of any stock exchange or an intermediary of the capital market

1.2(ii) f Independent directors are/were not the partners or executives during preceding 3 (three) years of any statutory audit fi rm

1.2(ii) g They are not the Independent directors in more than 3 (three) listed companies

1.2(ii) h They are not convicted by a court of competent jurisdiction as a defaulter in payment of any loan to a bank or a non bank fi nancial institution (NBFI)

1.2(ii) i They are not been convicted for a criminal off ence involving moral turpitude

1.2(iii) The independent directors shall be nominated by the board of directors and approved in the AGM

1.2(iv) The post of independent directors cannot remain vacant for more than 90 days

1.2(v) The board shall lay down a code of conduct of all board members and annual compliance of the code to be recorded

1.2(vi) The tenure of offi ce of an independent directors shall be for a period of 3 (three) years which may be extended for 1 (one) term only.


Condition no. Title


RemarksComplied Not

Complied1.3 Qualifi cation of Independent Director (ID):1.3(i) Independent Director shall be knowledgeable individual with

integrity, ability to ensure compliance with laws and make meaningful contribution

1.3(ii) Being a Business Leader/ Corporate Leader / Bureaucrat/UniversityTeacher (Economics /Business /Law)/Professionals like CA/CMA/CS having 12 years of management/ professional experience

1.3(iii) In special cases above qualifi cation may be relaxed by the commission N/A

1.4 Positions of Chairman of the Board and Chief Executive Offi cer shall be fi lled by diff erent individuals. The Board shall clearly defi ne the respective roles and responsibilities of the Chairman & CEO.

1.5 Directors’ Report to Shareholders:1.5(i) Industry outlook and possible future developments in the

industry

1.5(ii) Segment-wise or product-wise performance

1.5(iii) Risks and concerns

1.5(iv) A discussion on cost of goods sold, gross profi t margin and net profi t margin

1.5(v) Discussion on continuity of any Extra-Ordinary gain or loss N/A1.5(vi) Basis for related party transaction- a statement of all related

party transactions should be disclosed in the annual report

1.5(vii) Utilization of proceeds from public issues, right issues and/ or through any others instruments. N/A

1.5(viii) An explanation if the fi nancial results deteriorate after the company goes for IPO, RPO, Rights Off er, Direct Listing etc. N/A

1.5(ix) If signifi cant variance occurs between Quarterly Financial performance and Annual Financial Statements the management shall explain about the variance on their Annual Report

N/A

1.5(x) Remuneration to directors including independent directors

1.5(xi) The fi nancial statements prepared by the management of the issuer company present fairly its state of aff airs, the results of its operation, cash fl ows and changes in equity

1.5(xii) Proper books of account of the issuer company have been maintained.

1.5(xiii) Appropriate accounting policies have been consistently applied in preparation of the fi nancial statement and that the accounting estimates are based on reasonable and prudent judgment.


Condition no. Title


RemarksComplied Not

Complied1.5(xiv) International Accounting Standards (IAS)/Bangladesh

Accounting Standards (BAS)/International Financial Reporting Standards (IFRS)/Bangladesh Financial Reporting Standards (BFRS), as applicable in Bangladesh, have been followed in preparation of the fi nancial statements and any departure there-from has been adequately disclosed.

1.5(xv) The system of internal control is sound in design and has been eff ectively implemented and monitored.

1.5(xvi) There are no signifi cant doubts upon the issuer company's ability to continue as a going concern. If the issuer company is not considered to be a going concern, the fact along with reasons thereof should be disclosed.

1.5(xvii) Signifi cant deviations from the last year’s operating results of the issuer company shall be highlighted and the reasons thereof should be explained.

N/A

1.5(xviii) Key operating and fi nancial data of at least preceding 5 (fi ve) years shall be summarized.

1.5(xix) If the issuer company has not declared dividend (cash or stock) for the year, the reasons thereof shall be given. N/A

1.5(xx) The number of Board meetings held during the year and attendance by each director shall be disclosed.

1.5(xxi) The pattern of shareholding shall be reported to disclose the aggregate number of shares (along with name wise details where stated below) held by:

1.5(xxi) a Parent/Subsidiary/Associated Companies and other related parties (name wise details); N/A

1.5(xxi) b Directors, Chief Executive Offi cer, Company Secretary, Chief Financial Offi cer, Head of Internal Audit and their spouses and minor children (name wise details);

1.5(xxi) c Executives (Top 5 salaried employees other than above)

1.5(xxi) d Shareholders holding ten percent (10%) or more voting interest in the company (name wise details).

1.5(xxii) In case of appointment/re-appointment of a director the company shall disclose the following information to the shareholders:

1.5(xxii) a a brief resume of the director;

1.5(xxii) b nature of his/her expertise in specifi c functional areas;

1.5(xxii) c names of companies in which the person also holds the directorship and the membership of committees of the board.

2.0 Chief Financial Offi cer, Head of Internal Audit & Company Secretary:2.1 Appointment of CFO, Head of Internal Audit and Company

Secretary and defi ning of their respective roles, responsibilities and duties

2.2 Attendance of CFO and the Company Secretary at Board of Directors meeting


Condition no. Title


RemarksComplied Not

Complied3 Audit Committee:3 (i) Audit Committee shall be the sub-committee of the Board of

Directors.

3 (ii) The Audit Committee shall assist the Board of Directors in ensuring that the fi nancial statements refl ect true and fair view of the state of aff airs of the company and in ensuring a good monitoring system within the business.

3 (iii) The Audit Committee shall be responsible to the Board of Directors. The duties of the Audit Committee shall be clearly set forth in writing.

3.1 Constitution of the Audit Committee:3.1(i) The Audit Committee shall be composed of at least 3 (three)

members.

3.1(ii) Constitution of Audit Committee with Board Members including one Independent Director

3.1(iii) All members of the audit committee should be “fi nancially literate” and at least 1 (one) member shall have accounting or related fi nancial management experience.

3.1(iv) Filling of Casual Vacancy in Committee

3.1(v) The company secretary shall act as the secretary of the Committee.

3.1(vi) The quorum of the Audit Committee meeting shall not constitute without at least 1 (one) independent director.

3.2 Chairman of the Audit Committee:3.2(i) Chairman of the Audit Committee shall be an Independent

Director

3.2(ii) Chairman of the audit committee shall remain present in the Annual General Meeting (AGM).

3.3 Role of Audit Committee:3.3 (i) Oversee the fi nancial reporting process

3.3 (ii) Monitor choice of accounting policies and principles.

3.3 (iii) Monitor Internal Control Risk management process.

3.3 (iv) Oversee hiring and performance of external auditors.

3.3 (v) Review along with the management, the annual fi nancial statements before submission to the board for approval.

3.3 (vi) Review along with the management, the quarterly and half yearly fi nancial statements before submission to the board for approval.

3.3 (vii) Review the adequacy of internal audit function.

3.3 (viii) Review statement of signifi cant related party transactions submitted by the management.

3.3 (ix) Review Management Letters/ Letter of Internal Control weakness issued by statutory auditors.


Condition no. Title


RemarksComplied Not

Complied3.3 (x) When money is raised through Initial Public Off ering (IPO)/

Repeat Public Off ering (RPO)/Rights Issue the company shall disclose to the Audit Committee about the uses/applications of funds by major category (capital expenditure, sales and marketing expenses, working capital, etc), on a quarterly basis, as a part of their quarterly declaration of fi nancial results.

N/A

3.4 Reporting of the Audit Committee: 3.4.1 Reporting to the Board of Directors: 3.4.1 (i) The Audit Committee shall report on its activities to the Board

of Directors.

3.4.1 (ii) The Audit Committee shall immediately report to the Board of Directors on the following fi ndings, if any:-

3.4.1 (ii) a Report on confl icts of interests; N/A3.4.1 (ii) b Suspected or presumed fraud or irregularity or material defect

in the internal control system; N/A

3.4.1 (ii) c Suspected infringement of laws, including securities related laws, rules and regulations; N/A

3.4.1 (ii) d Any other matter which shall be disclosed to the Board of Directors immediately. N/A

3.4.2 Reporting to the Authorities N/A3.5 Reporting to the Shareholders and General Investors

4 External/Statutory Auditor’s Non-Engagement in: 4 (i) Appraisal or valuation services or fairness opinions.

4 (ii) Financial information systems design and implementation.

4 (iii) Book-keeping or other services related to the accounting records or fi nancial statements.

4 (iv) Broker-dealer services.

4 (v) Actuarial services.

4 (vi) Internal audit services.

4 (vii) Any other service that the Audit Committee determines.

4 (viii) No partner or employees of the external audit fi rms shall possess any share of the company they audit at least during the tenure of their audit assignment of that company.

4 (ix) Audit/certifi cation services on compliance of CG as required under condition 7(i)

5 Subsidiary Company: 5 (i) Provisions relating to the composition of the Board of

Directors of the holding company shall be made applicable to the composition of the Board of Directors of the subsidiary company.

N/A


Condition no. Title


RemarksComplied Not

Complied5 (ii) At least 1 (one) independent director on the Board of Directors

of the holding company shall be a director on the Board of Directors of the subsidiary company.

N/A

5 (iii) The minutes of the Board meeting of the subsidiary company shall be placed for review at the following Board meeting of the holding company.

N/A

5 (iv) The minutes of the respective Board meeting of the holding company shall state that they have reviewed the aff airs of the subsidiary company also.

N/A

5 (v) The Audit Committee of the holding company shall also review the fi nancial statements, in particular the investments made by the subsidiary company.

N/A

6 Duties of Chief Executive Offi cer (CEO) and Chief Financial Offi cer (CFO):6 (i) They have reviewed fi nancial statements for the year and that to the best of their knowledge and

belief:6 (i) a these statements do not contain any materially untrue

statement or omit any material fact or contain statements that might be misleading;

6 (i) b these statements together present a true and fair view of the company’s aff airs and are in compliance with existing accounting standards and applicable laws.

6 (ii) There are, to the best of knowledge and belief, no transactions entered into by the company during the year which are fraudulent, illegal or violation of the company’s code of conduct.

7 Reporting and Compliance of Corporate Governance:7 (i) The company shall obtain a certifi cate from a Professional

Accountant/Secretary (Chartered Accountant/Cost & Management accountant/ Chartered Secretary) regarding compliance of conditions of Corporate Governance Guidelines of the Commission and shall send the same to the shareholders along with the Annual Report on a yearly basis.

7 (ii) The directors of the company shall state, in accordance with the Annexure attached, in the directors' report whether the company has complied with these conditions.


Certifi cate on Compliance of Corporate Governance Guidelines


Report on Internal Control Objectives

The aim of internal control is to provide reasonable assurance, by means of system of processes and procedures implemented by DBH, that the following objectives may be achieved:

• To determine the reliability and integrity of information; (i.e. evaluating the internal control systems and the integrity of fi nancial and operating information produced by those systems);

• To determine whether compliance exists with policies, procedures, laws, and regulations;

• To determine if assets are safeguarded and verify the existence of those assets;

• To review operations or programs for consistency with established management goals and objectives;

• To assist members of our organization in the eff ective and successful performance of their responsibilities by providing them with analyses, appraisals, recommendations, and other pertinent information concerning the activities being reviewed.

As in the case with any control system, the Company’s internal system cannot guarantee that all risk of error or fraud is fully eliminated or controlled and safeguarded.

Internal control procedure

DBH believes on the principle of decentralization of authority and responsibility. Consequently, responsibility for the implementation of appropriate internal control procedures, governing risk management, fi nancial control and compliance with legislation is delegated to the

managers of each department of the Company. To ensure the consistency of Company’s procedures with each department, senior management relies on the functional department to draw up the procedures necessary for the proper operation of controls, issue instructions regarding their implementation and ensure compliance with the said instructions.

The key operations and the internal control procedures applicable to them are described below:

Internal control procedures in respect of fi nancial and accounting information

With view to ensure safe, secure, stable & eff ective transaction processing, Finance & Accounts Department of DBH is working with utmost effi ciency & professionalism.

Financial and accounting information is prepared centrally on the basis of fi nancial statements generated from the software application that is used by diff erent departments and in compliance with the IAS (International Accounting Standards) and IFRS (International Financial Reporting Standards) as adopted by the ICAB (Institute of Chartered Accountant of Bangladesh) from time to time.

Reports are produced monthly and prepared in the following month to which they relate whereas full accounting consolidations are produced quarterly and prepared within the following month to which they relate. The preparation of the annual fi nancial statements is the responsibility of the Management under the supervision of the Audit Committee and Company’s Auditor. The quarterly & half-yearly Financial Statements are prepared by the Management under the supervision of Audit Committee.


External fi nancial information

Financial communication to external parties consists of fi nancial statements prepared by the Management, submitted to the Board and reviewed and audited by the Auditors. Cash position and fi nancing

Responsibility for fund management is delegated to the treasury wing of the fi nance department by means of well defi ned procedures and delegation.

The fi nance & accounts department is responsible for borrowings and investment which is required to comply with specifi c procedures such as, position of the banks involved, risk-free investment and monitoring of fi nancial transactions.

Borrowings and investments are monitored on the monthly basis by means of report produced by the treasury and fi nance & accounts department and submitted to Senior Management.

Procedures and inspections

With the objectives of producing high quality fi nancial and accounting information, DBH has introduced procedures and instructions tailored to every section. These procedures are grouped by topic and deal mainly with accounting, treasury, regulatory and reporting issues.

The internal control & compliance department is independent from management. It audits the activities and systems of diff erent departments in accordance with an audit plan, particularly in order to assess and improve the accuracy and reliability of the accounting and fi nancial information.

The internal control & compliance department coordinates relations with external auditors.

Customer relation

With the aims of specifying and formalizing certain practices regarding contractual relations with its clients, DBH has developed a procedure for managing client risk. This includes limit in respect of credit, delegation of authority, security, insurance and documentation.

The legal department analyzes the legal provisions applicable to fi nancing agreements executed between DBH and the clients. We have standard documents defi ning the conditions with which the agreements should comply in order to reduce the level of risk. These standard documents are regularly reviewed by the concerned departments.

Human resources

While ensuring a performance driven culture and better learning environment, DBH has been engaged in minimizing operating costs and maximizing profi t at the optimal context. In connection with this view, the Human Resources department organizes career and skills development training for those positions requiring a high level of responsibility. It carries out the performance evaluation program in each year. This department provides industry information to the management as to the emolument and benefi ts. Human Resources department is responsible for ensuring compliance with the service rules and regulations.

Information technology

The Information Technology Department is responsible for integrating and ensuring the consistency of the hardware and software used. In DBH, most data processing is carried out by means of integrated software packages. Back up of the database is stored in a safe custody on daily, weekly and monthly basis at within and outside business premises.


Audit Committee ReportThe Audit Committee of the Company on behalf of the Board strives to ensure eff ective implementation of the processes set out in the business plans and policies. Its aim is to ensure that high standards of corporate reporting, control and compliance are achieved through its strong vigilance and monitoring of the followings areas:

• Oversee the Company’s fi nancial reporting process and the disclosure of its fi nancial information to ensure that the fi nancial statement is correct, suffi cient and credible;

• Recommend to the Board, the appointment, re-appointment and, if required, the replacement or removal of the statutory auditor and the fi xation of audit fees;

• Review with the management, the annual fi nancial statements before submission to the board for approval.

Composition of the Committee

The Audit Committee of DBH has been formed pursuant to the Bangladesh Bank’s guideline on Internal Control and Compliance (ICC) framework vides their DFIM Circular No.- 13, dated : October 26, 2011 and Bangladesh Securities and Exchange Commission’s Corporate Governance Guidelines dated August 7, 2012.

The Audit Committee at DBH was last reconstituted on September 29, 2015 and the present members of the Committee are:

1. Mr. M I Chowdhury - Chairman

2. Mr. Nasir A Choudhury - Member

3. Mr. Faruq A Choudhury - Member

4. Mr. A Z Mohammad Hossain - Member

5. Mr. Swapan Kumar Sarkar, FCA - Member

Mr. Jashim Uddin, Company Secretary is also the Secretary of the Audit Committee. The Head of Internal Audit concurrently reports to the Managing Director & CEO as well as to the Audit Committee.

Meeting of the Audit Committee

The Committee normally meets quarterly, but an emergency meeting of the Committee may be called, if required. However, during the year under review, 4 (four) Committee meetings were held. The Committee reviews the fi nancial reporting process, the system of internal control and management of fi nancial & operational risks through the audit process.

Audit Committee reviewed the annual fi nancial statements for the year 2014-2015 and placed its recommendations to the Board of Directors. Based on the review, the Audit Committee is of the view that the internal control and compliance procedures are adequate to present a true and fair view of the activities and fi nancial status of the Company and to ensure that its assets are safeguarded properly.

Roles and Responsibilities of the Committee

As set out by Bangladesh Bank and Bangladesh Securities & Exchange Commission, in addition to any other responsibility, which may be assigned from time to time by the Board, the audit committee is responsible for the following matters:

(a) Internal Control

(1) Evaluate whether management is setting the appropriate compliance culture by communicating the importance of internal control and the management of risk and ensuring that all employees


have understanding of their roles and responsibilities;

(2) Review the arrangements made by the management for building a suitable Management Information System (MIS) including computerization system and its applications;

(3) Consider whether internal control strategies recommended by internal and external auditors have been implemented by the management;

(4) Review the existing risk management procedures for ensuring an eff ective internal check and control system;

(5) Review the corrective measures taken by the management as regards the reports relating to fraud-forgery, defi ciencies in internal control or other similar issues detected by internal and external auditors and inspectors of the regulatory authority and inform the board on a regular basis.

(b) Financial Reporting

(1) Review the annual fi nancial statements and determine whether they are complete and consistent with the accounting standards set by the regulatory authority;

(2) Meet management and the external auditors to review the fi nancial statements before their fi nalization.

(3) The chairman of the audit committee shall be present and answerable to reply the accounting and audit related query in the general meeting.

(c) Internal Audit

(1) Review the activities and organizational structure of the internal audit function and ensure that no unjustifi ed restrictions or limitations are made;

(2) Review the effi ciency and eff ectiveness of internal audit function;

(3) Review that fi ndings and recommendations made by the internal auditors for removing the irregularities detected and also running the aff airs of the Institution are duly considered by the management.

(4) Recommend the Board in case of change of the accounting policies.

(d) External Audit

(1) Review the auditing performance of the external auditors and their audit reports;

(2) Review that fi ndings and recommendations made by the external auditors for removing the irregularities detected and also running the aff airs of the institution are duly considered by the management;

(3) Make recommendations to the Board regarding the appointment of the external auditors.

(e) Compliance with existing Laws and Regulations

Review whether the laws and regulations framed by the regulatory authorities (Bangladesh Bank and other bodies) and internal regulations approved by the Board have been complied with.


(f) Other Responsibilities

(1) Place reports before the Board on periodic basis regarding fi ndings, recommendations, regularization of the errors & omissions, fraud and forgeries and other irregularities as detected by the internal and external auditors and inspectors of regulatory authorities;

(2) Perform other oversight functions as requested by the Board and evaluate the Committee’s own performance on a regular basis.

(3) Receive and review the report of the internal audit which normally prepares for the higher management.

Reporting to the Board and the Shareholders

The Committee reports to the Board following each meeting. In addition, the Committee also provides:

Copies of minutes of the Meeting to the Board;

A report annually to the Board/ Shareholders;

Acknowledgement

The Board Audit Committee expressed its sincere thanks to the members of the Board, Management and the Auditors for their support in carrying out its duties and responsibilities eff ectively.

M I Chowdhury ChairmanAudit Committee


Green Banking Activities of DBH

Green banking considers all the environmental factors along with fi nancial priorities with an aim to protect the environment as well as to foster the economic development in a more environment friendly way. This concept of “Green Banking” will be mutually benefi cial to the banks, fi nancial institutions and the economy.

DBH has outlined a policy guideline for implementing Green Banking activities in a structured manner in line with standard norms so as to protect environmental degradation and ensure sustainable business practices.

Environment Friendly Loan Financing

We have incorporated sustainability principles into day-to-day activities of the Company. Our aim is to do best to ensure that the credits we extend to our customers are utilized for environmentally sound and sustainable purposes. DBH complies with environmental standard while fi nancing. Projects with likely adverse impact on environment are strongly discouraged by DBH. As an environment responsive Financial Institution, DBH ensures that the borrower has the due environmental clearance certifi cate from the concerned authorities while granting or renewing credit facilities. DBH has assessed environmental and social issues related to the projects at the time of granting credit facilities which refl ects DBH’s strong commitment in ensuring environmental and social safeguard of the projects, while creating a sense of accountability for the borrowers.

DBH also encourages it’s borrowers to have solar panel in their project at the time of appraising and granting housing loan facilities. In future the company aims to enhance the eff ort on preserving ecosystem, land, air and water, in line with broad corporate mission of the Company.

Improved In-house Management & Green practices

The Company has been maintaining a balanced initiative and supporting activity to contain things that may adversely aff ect the environment. DBH encourages rational use of energy in the offi ce and promotes the spirit of environment friendly action plans. Reduced utilization of electricity and minimum uses of water and paper have become mandatory for the offi cials.

Environmental Due Diligence (EDD)

DBH maintains Environmental Due Diligence at the time of processing proposal before placing the same to Management. Few clients of DBH have found applicable for EDD and after conducting Environmental Risk Rating (EnvRR) it is found that few clients have been fallen in the category of low risk and in moderate risk level.


Corporate SocialResponsibility (CSR) at DBHCorporate Social Responsibility (CSR) is a long-term approach which provides frameworks for successful enterprises that are harmonious with their surroundings. We believe that CSR must be sustainable part of our business regardless of changing fortunes. DBH as a responsible Financial Institution is fully aware of its responsibility about how its operational activities impact its stakeholders, the economy, the society, its staff and the environment.

We have put in place very strong and sensible CSR initiatives. CSR is an integral part of corporate culture and ethics of DBH. DBH recognizes and always upholds the rights of various group of stakeholders and treats them fairly.

DBH and its Customers

DBH is determined to serve its customers’ needs by off ering useful financial products and services, while maintaining good relationships with them. We have taken several measures to raise the bar of our service excellence to ensure that customers receive the best possible service. DBH ensures confi dentiality of customer’s information and attaches highest importance in complaint management. The Company strives to listen and learn from its stakeholders and to take the appropriate action where it applies, since responsible behavior towards its clients, shareholders and employees is an essential element of Company’s daily business.

DBH and its Employees

DBH has established a competitive and enabling working environment to help employees perform their best. DBH is working with a vision of converting human resources into human capital through appropriate knowledge, skills, abilities

and personal attribution. Creating a culture of healthy competition driven by knowledge is what we believe is the best way to prepare our employees to take up challenges of the contemporary business world. DBH ensures equal opportunities for all its employees in terms of both their personal and professional development. DBH ensures health and safety in the workplace while keeping it modern by providing all amenities for its employees. To attract talents and retain competency, we have a balanced compensation scheme comprising fi nancial and qualitative benefi ts. Besides providing competitive package, DBH provides various welfare schemes to its employees.

Gender Equality and Women’s Empowerment

DBH considers the responsibility for protection of human rights, gender equality and women’s empowerment. DBH is successfully developing in bringing diversity in workforce in context of age, gender, ethnicity and locality. DBH strives to strike the balance between male and female employees in the workforce.

Corporate Governance at DBH

As a strong believer of sustainable growth, principles of good corporate governance form the core values of DBH. In order to achieve transparent and sound corporate governance, we have adopted international best practices to help us sustain in this globalized competitive free market economy. Corporate governance policy of DBH recognizes the importance of the transparency to all its constituents; including employees, customers, investors and the regulatory authorities demonstrating that the shareholders are the ultimate benefi ciaries of the Company’s economic activities.


DBH’s corporate governance philosophy encompasses not only regulatory and legal requirements, including the BSEC Regulations and the Bangladesh Bank guidelines in respect of corporate governance but also other practices aimed at a high level of business ethics, eff ective supervision and enhancement of value for all shareholders.

Environmental Awareness

As an environment-responsive Institution we initiated Go Green campaign in our Company. DBH ensures borrower has the due environmental clearance certifi cate from the concerned authorities while granting or renewing credit facilities. DBH has assessed environmental and social issues related to the projects at the time of granting credit facilities which refl ects DBH’s strong commitment in ensuring environmental and social safeguard of the projects, while creating a sense of accountability for the borrowers.

DBH conducted various CSR activities during the fi nancial year 2014-2015. The highlights of the activities taken during the reporting period are as follows:

• DBH has come forward to stand by the cold-hit people of the country for distribution of blankets among the poor. DBH has delivered 2000 piece blankets to the BRAC-AAF to distribute the blankets among the poor to address the misery of the poor and fl oating people, who are the worst suff erers in the chilling cold sweeping through many districts of the country.

• DBH has contributed Tk. 5 lac for building the MUKTIJODDHA MUSEUM which will give an idea about the history of war of liberation to the present and future generation and get imbued with the spirit of patriotism and liberal democratic ideas.


Disclosures on Capital Adequacy and Market Discipline (CAMD) ‒ Pillar III

A) Scope of Application

Qualitative Disclosures:

(a) These guidelines apply to Delta Brac Housing Finance Corporation Ltd.

(b) DBH has no subsidiary companies.(c) Not Applicable

Quantitative Disclosures:

(d) Not Applicable

B) Capital Structure

Qualitative Disclosures

(a) Summary information on terms and conditions of the main features of all capital instruments, especially in the case of capital instruments eligible for inclusion in Tier 1 or Tier 2.

Tier 2 Capital includes:

i) General provision up to a limit of 1.25% of Risk Weighted Asset (RWA) of Credit Risk

Conditions for maintaining regulatory capital:

i) The amount of Tier 2 capital will be limited to 100% of the amount of Tier 1 capital.


(b) The amount of Tier 1 capital, with separate disclosure of:

Particulars Amount in Crore Taka

Paid up capital 116.05Non-repayable share premium account

5.50

Statutory reserve 81.19General reserve & other reserve 60.80Retained earning 36.20Dividend equalization account 17.35

Amount in Crore Taka

c) The total amount of Tier 2 capital 20.83(d) Other deductions from capital - (e) Total eligible capital 337.92

C) Capital Adequacy


(a) A summary discussion of DBH’s approach to assessing the adequacy of its capital to support current and future activities.

Risk Weighted Assets (RWA) and Capital Adequacy Ratio (CAR)

DBH has applied Standard Approach for computation of Capital Charge for Credit Risk and Market Risk while Basic Indicator Approach for Operational Risk. Total Risk Weighted Assets (RWA) of the Company is determined by multiplying capital charge for market risk and operational risk by reciprocal of the minimum capital adequacy


ratio and adding the resulted fi gures to the sum of risk weighted assets for credit risk. Total RWA is then used as denominator while total Eligible Capital as numerator to derive Capital Adequacy Ratio.

Strategy to Achieve the Required Capital Adequacy:

• Rigorous monitoring of overdue loans to bring those under 90 days overdue

• Financing clients having good rating as per Company’s policy

• Using benefi t of credit risk mitigation by taking eligible collaterals against transactions

• Focusing more to increase the spread on housing loan and thus increasing retained earnings

• Raise fresh capital by issuing bonus share/right issue.

Quantitative Disclosures

Amount in crore Taka

(b)Capital requirement for Credit Risk 166.61

(c)Capital requirement for Market Risk 3.04

(d)Capital requirement for Operational Risk 24.68

(e)Total and Tier 1 capital ratio:

CAR on Total capital basis (%) 17.39

CAR on Tier 1 capital basis (%) 16.32

D) Credit Risk


(a) The general qualitative disclosure requirement with respect to credit risk including:

• Defi nitions of past due and impaired (for accounting purposes)

As per the Bangladesh Bank’s Prudential Guideline on Capital Adequacy and Market Discipline for Financial Institutions, the unsecured portion of

any claim or exposure (other than claims secured by residential property) that is past due for 90 days or more, net of specifi c provisions (including partial write-off ) will be risk weighted as per risk weights of respective balance sheet exposures. For the purpose of defi ning the net exposure of the past due loan, eligible fi nancial collateral (if any) may be considered for Credit Risk Mitigation.

• Description of approaches followed for specifi c and general allowances and statistical methods

General provisions are maintained according to the relevant Bangladesh Bank Guideline and Specifi c provisions are maintained as per DBH’s internal policy which is much more conservative than Bangladesh Bank Guidelines.

Discussion on FI’s credit risk management policy: Implementation of various strategies to minimize risk:

To encounter and mitigate credit risk, the following control measures are taken place at DBH:

• Vigorous monitoring and follow up by fully dedicated recovery and collection team

• Strong follow up of compliance of credit policies by appraiser and credit department

• Taking collateral, performing valuation and legal vetting on the proposed collateral by members of our own dedicated technical and legal department

• Seeking legal opinion from external lawyers for any legal issues if required

• Regular review of market situation and industry exposures

• Insurance coverage for funded assets.

In addition to the best industry practices for assessing, identifying and measuring risks, DBH also considers Guideline for Managing Core Risks


of Financial Institutions issued by Bangladesh Bank for management of risks.

Approved Credit Policy by the Board of Directors

The Board of Directors has approved the credit policy for the company where major policy guidelines, growth strategy, exposure limits and risk management strategies have been described/stated. Credit policy is regularly updated to cope up with the changing global, environmental and domestic scenarios.

Separate Credit Administration Department

An independent Credit Administration Department is in place, at DBH, to scrutinize all loans from risk-weighted point of view and assist the management in creating a high quality portfolio and maximize returns from assets. The Credit department assesses credit risks and suggests mitigations and ensures that adequate security documents are in place before sanction of loan and before disbursement of loans.

Special Recovery and Collection Team

A strong recovery team monitors the performance of the loans and advances, identifi es early sign of delinquencies in portfolio and takes corrective measures to mitigate risks, improve loan quality and to ensure recovery of loans in a timely manner including legal actions.

Independent Internal Compliance Department

Appropriate internal control measures are in place at DBH. An Internal Compliance Department has been established to ensure compliance with all internal guidelines, Bangladesh Bank guidelines, operational procedures and adequacy of internal control and documentation procedures.

Credit Evaluation

To mitigate credit risk, DBH search for credit reports from Credit Information Bureau (CIB) of Bangladesh Bank. The report is scrutinized by

Credit Admin Department and Loan Operation Department to understand the liability condition and repayment behavior of the client. Depending on the reports, opinions are taken from the concerned related parties for better understanding about client’s credit worthiness.

Credit Approval Process

To ensure both speedy service and mitigation of credit risk, the approval process is maintained through a multilayer system.

Depending on the size of the loan, a multilayer approval system is designed. As smaller loan are very frequent and comparatively less risky, lower sanctioning authority is set to improve processing time and associated risk. Bigger loans require more scrutiny as the associated risk is higher hence sanctioning authority is higher as well.

Early Warning System

Performance of loans is regularly monitored to trigger early warning system to address the loans and advances whose performance show any deteriorating trend. It helps the company to grow its credit portfolio with ultimate objective of protecting the interest of the stakeholders.

Methods used to measure Credit Risk

As per the directives of Bangladesh Bank, ‘The Standardize Approach’ is applied by the company to measure its Credit Risk.


(b) Total gross credit risk exposures broken down by major types of credit exposure.

Particulars Amount in crore Taka

Housing Loan 2,881.06Loan against Deposit 20.78Staff Loan 12.53Installment Receivables 10.46Total 2,924.83


(c) Geographical distribution of exposures, broken down in signifi cant areas by major types of credit exposure.

Area Amount in crore TakaDhaka 2,686.48Chittagong 222.66Sylhet 15.69Total 2,924.83

(d) Industry or counterparty type distribution of exposures, broken down by major types of credit exposure.

Sector Amount in crore TakaHousing & Real Estate 2,902.97Others 21.86Total 2,924.83

(e) Residual contractual maturity breakdown of the whole portfolio, broken down by major types of credit exposure.


Repayable on demand 10.46Not more than 3 months 149.29Over 3 months but not more than 1 year

394.27

Over 1 year but not more than 5 years

1,380.26

Over 5 years 990.55Total 2,924.83

(f) By major industry or counterparty type:

i) Amount of impaired loans and if available, past due loans, provided separately

The amount of classifi ed loans and advances of DBH are given below as per Bangladesh Bank guidelines.


Housing loans up to 5 years 3.00Housing loans over 5 years 5.77Totals 8.77

ii) Specifi c and general provisions:

Specifi c and general provisions were made on the amount of classifi ed and unclassifi ed loans and advances of DBH.


Provision on classifi ed loans and advances

8.77

Provision on unclassifi ed loans and advances

90.78

Total 99.55

iii) Charges for specifi c allowances and charge-off s during the year.

During the year the specifi c and general provisions were made on the amount of classifi ed and unclassifi ed loans and advances of DBH.


Provision on classifi ed loans and advances

2.89

Provision on unclassifi ed loans and advances

20.00

Total 22.89

Amount in crore Taka(g) Gross Non Performing Assets (NPAs) 8.77

Non Performing Assets (NPAs) to outstanding Loans and Advances 0.30%

Movement of Non-Performing Assets (NPAs)

Amount in crore TakaOpening Balance 5.88Additions 4.66Reductions 1.77Closing Balance 8.77


Movement of Specifi c Provisions for NPAs

Opening Balance 1.66Provisions made during the period -Write-off 0.042Written-back of excess provisions 0.89Closing Balance 0.73

E) Equities: Banking book positions


(a) The general qualitative disclosure requirement with respect to equity risk, including:

Diff erentiation between holdings on which capital gains are expected and those taken under other objectives including for relationship and strategic reasons

Total equity shares holdings except Bangladesh Rating Agency Ltd. are for capital gain purpose and share holding of Bangladesh Rating Agency Ltd. are for relationship and strategic purpose.

Discussion of important policies covering the valuation and accounting of equity holdings in the banking book positions. This includes the accounting techniques and valuation methodologies used, including key assumptions and practices aff ecting valuation as well as signifi cant changes in these practices.

Quoted shares are valued at cost prices and if the total cost of a particular share is lower than the market value of that particular share, then provision are maintained as per terms and conditions of regulatory authority. Mutual funds have been valued at 85% of latest published NAV available as on June 30, 2015. On the other, unquoted share is valued at cost price or book value as per latest audited accounts.


(b) Value disclosed in the balance sheet of investments, as well as the fair value of those investments, for quoted securities, a comparison to publicly quoted share values where share price is materially diff erent from fair value.


Quoted shares (Market price) 15.19Quoted shares (Cost Price) 30.24Unquoted shares 1.20

(c) The cumulative realized gain (losses) arising from sales and liquidations in the reporting period.


Cumulative realized gain 0.174

(d)


Total unrealized gains(Losses) (5.81)Total latent revaluation gains (Losses)

-

Any amounts of the above included in Tier 2 Capital

-

(e) Capital requirements broken down by appropriate equity groupings, consistent with FI’s methodology, as well as the aggregate amounts and the type of equity investments subject to any supervisory provisions regarding regulatory capital.

Specifi c Risk ‒Market value of investment in equities is BDT 15.19 crore. Capital requirement is 10% of the said value which stands at BDT 1.52 crore.


General Risk ‒ Market value of investment in equities is BDT 15.19 crore. Capital requirement is 10% of the said value which stands at BDT 1.52 crore.

F) Interest rate in the banking book


(a) The general qualitative disclosure requirement including the nature of interest risk and key assumptions, including assumptions regarding loan prepayments and behavior of non-maturity deposits.

Interest rate risk in the banking book arises from mismatches between the future yield of assets and their funding cost. Assets Liability Committee (ALCO) monitors the interest rate movement on a regular basis.

DBH measures the interest rate risk by calculating maturity gap between Risk Sensitive Assets (RSA) and Risk Sensitive Liabilities (RSL) i.e. a positive maturity gap aff ect company’s profi tability positively with the increment of interest rate and negative maturity gap aff ects company’s profi tability adversely with the increment of interest rate.


(b) The increase (decline) in earning or economic value (or relevant measure used by management) for upward and downward rate shocks according to management’s method for measuring interest rate risk broken down by currency (as relevant).

Interest Rate Risk-Increase in Interest Rate: (BDT in Crore) Where applicable

Particulars

Maturity wise Distribution of Assets-Liabilities1 to 30/31day (Onemonth)

Over 1month to 2months

Over 2months to 3 months

Over 3months to 6 months

Over 6months to 1 year

A. Total Rate Sensitive Liabilities (A) 119.06 197.70 155.18 334.64 255.13B. Total Rate Sensitive Assets (B) 95.48 319.71 163.96 239.53 254.04C. Mismatch -23.58 122.01 8.78 -95.12 -1.09D. Cumulative Mismatch -23.58 98.43 107.20 12.09 11.00E. Mismatch (%) -19.81% 61.71% 5.66% -28.42% -0.43%

Interest Rate Risk

Magnitude of ShockMinor Moderate Major2% 4% 6%

Change in the Value of Bond Portfolio (BDT in Crore ) 0.00 0.00 0.00Net Interest Income (BDT in Crore) 0.22 0.44 0.66Revised Regulatory Capital (BDT in Crore) 338.14 338.36 338.58Risk Weighted Assets (BDT in Crore) 1943.23 1943.23 1943.23Revised CAR (%) 17.40% 17.41% 17.42%


G) Market Risk


(a) Views of BOD on trading/investment activities

All the Market risk related policies/guidelines are duly approved by BOD. The BOD sets limits, reviews and updates the compliance on regular basis aiming to mitigate market risk.

Method used to measure Market risk

Market risk is the probability of losing assets in balance sheet and off -balance sheet position arising out of volatility in market variables i.e. interest rate, exchange rate and prices of securities. In order to calculate the market risk for trading book purposes the company uses Standardize (rule based) Approach. Capital charge for interest rate risk and foreign exchange risk is not applicable to our company as we do not have such balance sheet items.

Market Risk Management System

A system for managing Market Risk is in place where guideline has been given regarding long-term, short-term funding, liquidity contingency plan, local regulatory compliance etc. Treasury manages the Market risk with the help of Asset Liability Management Committee (ALCO) and Asset Liability Management (ALM) Desk in the following manner:

Interest Risk Management

Treasury Department reviews the risk of changes in the income of the company as a result of movements in the market interest rates. In the normal course of business, DBH tries to minimize the mismatches between the duration of interest rate sensitive assets and liabilities. Eff ective Interest Rate Risk Management is done as under:

Market analysis

Market analysis over interest rate movements are reviewed by the Treasury Department of the company. The type and level of mismatch interest rate risk of the company is managed and monitored from two perspectives, being an economic value perspective and earning value perspective.

GAP analysis

ALCO has established guidelines in line with central bank’s policy for the management of assets and liabilities, monitoring and minimizing interest rate risks at an acceptable level. ALCO in its regular monthly meeting analyzes Interest Rate Sensitivity by computing GAP i.e. the diff erence between rate sensitive assets and rate sensitive liabilities and takes decision of enhancing or reducing the GAP according to prevailing market situation aiming to mitigate interest rate risk.

Continuous Monitoring

Company’s treasury manages and controls day-to-day trading activities under the supervision of ALCO that ensures continuous monitoring of the level of assured risks.

Equity Risk Management

Equity Risk is the risk of loss due to adverse change in the market price of equities held by the Company.

Equity Risk is managed by the following manner:

DBH minimizes the equity risks by portfolio diversifi cation as per investment policy of the Company.



(b) The capital requirements for Market Risk:

Amount in crore TakaInterest rate risk -

Equity position risk 3.04

Foreign Exchange Position andCommodity risk (If any) -

H) Operational Risk:

Qualitative disclosure:

a) Views of Board on the system to reduce Operational Risk:

All the policies and guidelines of internal control and compliances are established as per advice of the Board. The Board delegates its authority to Executive Committee and Managing Director. Audit Committee of the Board oversees the activities of internal control and compliance as per good governance guideline issued by Bangladesh Securities and Exchange Commission.

Performance gap of executives and staff

DBH’s recruitment policy is based on retaining and attracting the most suitable people at all levels of the business and this is refl ected in our objective approach to recruitment and selection. The approach is based on the requirements of the job (both now and in future), matching the ability and potential of the individual. Qualifi cation, skills and competency form our basis for nurturing talent. Favorable job responsibilities are increasingly attracting greater participation from diff erent level of employees in the DBH family. We aim to foster a sense of pride in working for DBH and to be the employer of choice. As such there exists no performance gap in DBH.

Potential external events

No such potential external event exists to raise operational risk of DBH at the time of reporting.

Policies and Procedure for mitigating operational risk

DBH has established a strong Internal Control Department to address operational risk and to frame and implement policies to deter such risks. Internal Control Department assesses operational risk across the company and ensures that appropriate framework exists to identify, assess and manage operational risk.

Approach to calculating capital charge for operational risk:

Operational risk is defi ned as the risk of loss resulting from inadequate or failed internal processes, people and system or from external events. DBH uses basic indicator approach for calculating capital charge against operational risk i.e. 15% of average positive annual gross income of the company over last three years.


b) Capital requirement for operational risk:

Amount in crore Taka

Capital requirement for operational risk: 24.68


Report on Going Concern Status of DBHFinancial Statements of a Company are required to be prepared on the basis of going concern concept as per Bangladesh Accounting Standards (BAS)-1. Under this concept it is assumed that the Company will continue its business indefi nitely and will not cease trading or liquidate and therefore the Company must be able to generate enough resources to stay operational.

The Board of Directors of Delta Brac Housing Finance Corp. Ltd. have made annual assessment about whether there exists a material uncertainty which may cast signifi cant doubt upon the Company’s ability to continue as going concern. The Director’s assessment of whether the company is going concern entity involves making appropriate inquiries including review of budget and future outcome of inherent uncertainties in existence. The Directors are convinced from the following indications, which give reasonable assurance as to company’s continuance as a going concern for the foreseeable future.

Financial Indications

Less reliance on short term borrowing:At the end of June 2015, total short term borrowings of the Company were Taka 96.92 crore, representing only 3 percent of total liabilities that indicates the Company has least reliance on short term borrowings.

Continuous fi nancial support from lenders/depositors:The Company has a very good track record and reputation in settlement of its obligation with its lenders/depositors. So, we enjoy easy and fair access to the funding sources to meet our increasing need for growth. In 2014-15 our deposit portfolio has increased by 15 percent, which

refl ect the growing confi dence of depositors/lenders on DBH.

Positive key fi nancial ratios:The Company has very positive fi nancial ratios as evident from fi nancial summary given on page 21 of this Annual Report. Such positive fi nancial ratios indicate Company’s sound fi nancial strength and good prospects.

Consistent payment of dividends:The Company has been paying dividend consistently to its shareholders before listing that refl ects Company’s long-term viability in operational existence over many years. Historical dividend payment record is given on page 23 of this Annual Report.

Credibility in payment of obligations:The Company has strong sincerity in terms of payment of its obligations to the lenders. The Company is very particular in fulfi lling the terms of loan agreement and never defaulted to meet its obligations.

Term deposit from individuals and corporate with realistic renewal or repayment:At the close of fi nancial year 2014-15, total fi xed deposit of the Company were Taka 2,470.31 crore. Based on past experience we can say that there is every possibility that major part of the deposit would be renewed further.

Operating Performance growth: Though the overall fi nancial sectors suff er during the year, DBH has maintained growth in its operating performance. Company’s total loans & advances have increased from Taka 2,708.72 crore to Taka 2,924.83 crore, indicating a growth of 8 percent over last year. Total operating income


is Taka 178.35 crore and total profi t after tax is Taka 68.53 crore. All those indicators support Company’s continuance in foreseeable periods.

Operating Indications

No key management turnoverDuring the year 2014-15, the Company has not experienced any event of turnover in key management positions. Employees has long-term commitment and loyalty in the Company.

Corporate environment and employee satisfaction:There exists a very good corporate environment in the Company. DBH is an excellent working place with friendly environment. Communication among the employees is very excellent. The company endeavors to be honest and practices fair treatment to all employees which ensures good corporate environment. The Company pays a very competitive compensation package and there exists a good number of employee benefi ts like transport benefi t, maternity benefi t, performance bonus, gratuity, provident fund etc., which considered to be instrumental for employee satisfaction.

Other Indications

Credit ratingDBH has assigned the highest rating of ‘AAA’ and short term rating of ‘ST-1’ for 9 (nine) consecutive years’ which indicates the consistent upholding of good capital base, quality of assets, good franchise value and management excellence supported by a sound corporate structure.

Maintenance of suffi cient capital:As on 30 June 2015, the company’s total equity stands at Tk. 317.09 crore. As per BASEL II guideline of Bangladesh Bank, minimum CAR requirement is 10% and as on 30 June 2015, DBH’s Capital Adequacy Ratio is 17.39%.

As on June 30, 2015, the Company’s total paid-up capital stands at Taka 116.05 crore, while the minimum paid-up capital as required by Bangladesh Bank is Taka 1,00.00 crore.

Strong equity base:As on June 30, 2015, total equity of the Company stands at Taka 317.09 crore (2014- 277.57 crore) representing an increase of 14.23 percent over last year that refl ects company’s long-term viability.

Strong CAMEL rating:CAMEL rating is used by Bangladesh Bank as a tool for evaluating the strength and performance of a non-banking fi nancial institution. The composite rating adjudged by Bangladesh Bank signifi es satisfactory performance of DBH.

Changes in Government policy:Management anticipates no signifi cant change in legislation or government policy, which may materially aff ect the business of the Company.

Based on the above indications, Directors feel it is appropriate to adopt going concern assumption and there is no material uncertainty in preparing the fi nancial statements. Adequate disclosures have been made in the fi nancial statements and diff erent sections of the annual report to understand the appropriateness of going concern basis in preparing fi nancial statements.


Certifi cation on Financial Statements by CEO and CFOThe fi nancial statements of the Delta Brac Housing Finance Corporation Ltd. are prepared in compliance with International Accounting Standard (IAS)/Bangladesh Accounting Standards (BAS)/ International Financial Reporting Standards (IFRS)/ Bangladesh Financial Reporting Standard (BFRS), as applicable in the Country, and any departure there-from has been adequately disclosed.

The estimates and judgments related to the fi nancial statements were made on a prudent and reasonable basis, in order for the fi nancial statements to reveal a true and fair view. The form and substance of transactions and the Company’s state of aff airs reasonably presented. To ensure this, the Company has taken proper and adequate care in installing a system of internal control and accounting records. Our internal auditors have conducted periodic audits to provide reasonable assurance that the established policies and procedures of the Company were consistently followed. However, there are inherent limitations that should be recognized in weighing the assurance provided by any system of internal controls and accounting.

In this regard, we also certify to the Board that:-

(i) We have reviewed fi nancial statements for the year and that to the best of our knowledge and belief:

a) these statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading;

b) these statements together present a true and fair view of the Company’s aff airs and are in compliance with existing accounting standards and applicable laws.

(ii) There are, to the best of knowledge and belief, no transaction entered into by the Company during the year which are fraudulent, illegal or violation of the Company’s code of conduct.

Q. M. Shariful Ala Syed Aminul Islam Managing Director & CEO SVP & Head of Finance


Delta Brac Housing Finance Corporation LimitedAuditors’ Report and

Audited Financial StatementsFor the year ended 30 June 2015


Independent Auditors’ ReportTo the Shareholders of Delta Brac Housing Finance Corporation Limited

We have audited the accompanying fi nancial statements of Delta Brac Housing Finance Corporation Ltd. (DBH or “the Company”) which comprise the Balance Sheet as at 30 June 2015 and the Profi t & Loss Account, Statement of Changes in Equity and Statement of Cash Flows for the year then ended, and a summary of signifi cant accounting policies and other explanatory notes.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these fi nancial statements in accordance with Bangladesh Financial Reporting Standards (BFRSs), the Financial Institution Act 1993, the rules and regulations issued by the Bangladesh Bank, the Companies Act 1994, the Securities and Exchange Rules 1987 and other applicable laws and regulations and for such internal control as management determines is necessary to enable the preparation of fi nancial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditors’ Responsibility

Our responsibility is to express an opinion on these fi nancial statements based on our audit. We conducted our audit in accordance with Bangladesh Standards on Auditing (BSAs). Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the fi nancial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fi nancial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the fi nancial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation and fair presentation of the fi nancial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the eff ectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the fi nancial statements.

We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the fi nancial statements present fairly, in all material respects, the fi nancial position of the company as at June 30, 2015 and its fi nancial performance and its cash fl ows for the year then ended in accordance with Bangladesh Financial Reporting Standards and comply with the Financial Institution Act 1993, the rules and regulations issued by Bangladesh Bank, the Companies Act 1994, the Securities and Exchange Rules 1987 and other applicable laws and regulations.


We also report that,

a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit and made due verifi cation thereof;

b) in our opinion, proper books of account as required by law have been kept by the Company so far as it appeared from our examination of those books;

c) the Company’s Balance Sheet and Profi t and Loss Account dealt with by the report are in agreement with the books of account;

d) the expenditure incurred and payment made were for the purpose of the Company’s business;

e) the fi nancial statements have been drawn up in conformity with the rules and regulations issued by Bangladesh Bank to the extent applicable to the Company;

f) adequate provisions have been made for advances which are, in our opinion, doubtful of recovery;

g) the Company has complied with the relevant laws pertaining to reserves and maintenance of liquid assets;

h) the information and explanations required by us have been received and found satisfactory.

Dated: Dhaka A. Qasem & CoSeptember 30, 2015 Chartered Accountants


Balance SheetAs at 30 June 2015

Notes June 30, 2015Taka

June 30, 2014Taka

PROPERTY AND ASSETSCash 540,453,046 503,538,692 In hand 3.1 69,383 80,512 Balance with Bangladesh Bank and its agent bank 3.2 540,383,663 503,458,180

Balance with other banks and fi nancial institutions 5,332,811,224 5,804,562,037 In Bangladesh 4.1 5,332,811,224 5,804,562,037 Outside Bangladesh - -

Money at call on short notice 5 - -

Investments 6 364,409,364 370,108,738 Government - - Others 364,409,364 370,108,738

Loans and advances 29,248,299,327 27,087,224,077 Loans and advances 7 29,248,299,327 27,087,224,077

Fixed assets including land, building, furniture and equipments 8 115,956,056 26,214,052 Other assets 9 84,149,494 153,285,180 Total Assets 35,686,078,511 33,944,932,776

LIABILITIES AND CAPITALLiabilities Borrowing from other banks and fi nancial institutions 10 5,308,507,195 7,052,079,138 Deposit and others accounts 24,703,115,270 21,549,503,042 Fixed deposits 11.1 24,703,115,270 21,549,503,042 Other deposits - -

Other liabilities 12 2,503,539,630 2,567,564,466 Total Liabilities 32,515,162,095 31,169,146,646 Shareholders' equityPaid-up capital 13.2 1,160,493,750 1,160,493,750 Share premium 14 55,000,000 55,000,000 Statutory reserve 15 811,924,646 674,873,901 Other reserves 16 781,540,000 568,040,000 Retained earnings 32 361,958,020 317,378,479 Total equity 3,170,916,416 2,775,786,130 Total liabilities and Shareholders' equity 35,686,078,511 33,944,932,776

OFF-BALANCE SHEET ITEMSContingent liabilities 17.1Acceptances and endorsement - - Letter of guarantee - - Irrevocable letter of credits - - Bills for collection - - Other contingent liabilities 16,739,437 71,985,456 Total contingent liabilities 16,739,437 71,985,456 Other commitments 17.2Documentary credit & short-term trade related transaction - - Forward assets purchased and forward deposit placed - - Undrawn note issuance and revolving underwriting facilities - - Undrawn formal standby facilities, credit lines and other commitments 404,305,000 372,055,789 Total other commitments 404,305,000 372,055,789 Total Off -Balance Sheet items including contingent liabilities 421,044,437 444,041,245 Notes:1. Auditors’ Report-Page 1 & 22. The annexed notes 1 to 38 form an integral part of these fi nancial statements. 3. These fi nancial statements were approved by the Board of Directors on September 29, 2015 and were signed on its behalf by:

Dated, Dhaka;September 30, 2015 A. Qasem & Co.

Chartered Accountants

Swapan Kumar Sarkar, FCADirector

Nasir A. ChoudhuryDirector


Q. M. Shariful Ala, FCAManaging Director & CEO


Profi t and Loss AccountFor the year ended 30 June 2015

Notes 2014 - 2015 Taka

2013 - 2014Taka

Interest Income 18 4,423,424,248 4,635,068,844 Interest paid on deposits and borrowings etc. 19 2,785,293,321 3,071,021,733 Net interest income 1,638,130,927 1,564,047,111

Income from investment 20 12,986,809 19,602,473 Commission, exchange and brokerage 21 104,390,616 98,475,718 Other operating income 22 28,028,566 28,284,739 Total operating income 1,783,536,918 1,710,410,041

Salary and allowances 23 228,428,656 189,059,414 Rent, taxes, insurance, electricity, etc. 24 35,918,099 33,163,896 Legal & professional expenses 25 1,391,877 1,401,448 Postage, stamp, telecommunication, etc. 26 6,045,565 5,287,243 Stationery, printing, advertisements, etc. 27 8,560,048 19,266,286 Managing Director's salary and fees 12,730,000 10,600,000 Directors' fees and expenses 28 821,241 1,071,140 Auditors' fees 29 287,500 258,750 Depreciation, repair & maintenance 30 22,266,077 20,668,817 Other expenses 31 29,328,087 34,926,171 Total operating expenses 345,777,150 315,703,165 Profi t before provisions 1,437,759,768 1,394,706,876 ProvisionsLoans and advances 12.1.3 228,880,313 171,740,627 Diminution in value of investments 12.1.4 (50,512,555) 23,773,010 Total provisions 178,367,758 195,513,637 Profi t before tax 1,259,392,010 1,199,193,239 Provision for taxCurrent 12.2 571,656,355 592,645,854 Deferred 9.3 a 2,481,931 (796,177)

574,138,286 591,849,677 Profi t after tax 685,253,724 607,343,562

AppropriationsStatutory reserve 137,050,745 121,468,712 General reserve - - Dividend on preference share - 10,000,000

137,050,745 131,468,712 Retained surplus 548,202,979 475,874,850

Earnings Per Share 33 5.90 5.15 Notes:1. Auditors’ Report-Page 1 & 22. The annexed notes 1 to 38 form an integral part of these fi nancial statements. 3. These fi nancial statements were approved by the Board of Directors on September 29, 2015 and were signed on its behalf by:








Cash Flow Statement For the year ended 30 June 2015

2014 - 2015Taka

2013 - 2014Taka

Cash fl ows from operating activities Interest received 4,480,355,752 4,737,912,077 Interest payments (2,856,959,405) (3,332,657,773)Dividend received 10,577,363 5,805,097 Fees and commission received 104,390,616 98,475,718 Paid to employees (249,974,984) (205,223,023)Paid to suppliers and for various operating expenses (90,407,629) (84,467,298)Income tax paid (700,000,823) (601,112,288)Received from other operating activities 25,272,858 30,859,588 Cash generated from operating activities before Changes in operating assets and liabilities 723,253,748 649,592,098

Increase/(decrease) in operating assets and liabilitiesLoans and advances to customers (2,172,321,601) (1,799,272,712)Other assets 31,107,847 (28,554,186)Loans and deposits from banks and other customers 1,344,190,669 750,701,417 Other liabilities (39,393,742) (15,274,498)Cash utilized in operating assets and liabilities (836,416,827) (1,092,399,979)Net cash generated from operating activities (113,163,079) (442,807,881)

Cash fl ows from investing activitiesNet proceed from investment in trading securities (34,300,627) 77,994,119 Other investments 40,000,000 (90,000,000)Purchase of property, plant & equipment (103,516,530) (3,996,390)Proceeds from sell of property, plant & equipment 417,600 196,640 Net cash used in investing activities (97,399,557) (15,805,631)

Cash fl ows from fi nancing activitiesPayments for redemption of preference share - (100,000,000)Payment of Preference share dividend - (20,000,000)Cash dividend paid (290,123,438) (290,123,438)Payment for fi nance lease - (1,257,631)Net cash used in fi nancing activities (290,123,438) (411,381,069)

Net increase in cash and cash equivalents (500,686,074) (869,994,581)Cash and cash equivalents (net off overdraft) at the beginning of the period 5,944,791,494 6,814,786,075

Cash and cash equivalents (net off overdraft) at the end of the period 5,444,105,420 5,944,791,494

Notes:1. Auditors’ Report-Page 1 & 2 2. The annexed notes 1 to 38 form an integral part of these financial statements. 3. These financial statements were approved by the Board of Directors on September 29, 2015 and were signed on its behalf by:








Statement of Changes in Equity

For the year ended June 30, 2015

Amou

nt in

Taka

Particulars

Paid-up Capital

Preference Share

Capital

Share Premium

Statutory Reserve

General & Other

Reserves

Retained earnings

Total

Balance as on 1 July 2014

1,160,493,750

- 55,000,000

674,873,901

568,040,000

317,378,479 2,775,786,130

Net profi t (after tax) for the period

- -

- -

- 685,253,724

685,253,724

Transferred to reserve funds

- -

- 137,050,745

213,500,000

(350,550,745)

-

Cash dividend paid

(290,123,438)

(290,123,438)

Balance as at June 30, 2015

1,160,493,750

- 55,000,000

811,924,646

781,540,000

361,958,020 3,170,916,416

Balance as at June 30, 2014

1,160,493,750

- 55,000,000

674,873,901

568,040,000

317,378,479 2,775,786,130


Amount in Taka

Particulars

up to

1 Month

1 to 3

Months

3 to 12

Months

1 to 5

Years

Above

5 Years

Total

Assets

Cash (In hand and balance with Bangladesh Bank and its' agent bank)

540,453,046

- -

- -

540,453,046

Balance with other banks and fi nancial institutions

532,811,224 3,850,000,000

950,000,000

- -

5,332,811,224

Money at call on short notice

- -

- -

-

Investments

282,409,864

- 19,500,000

60,000,000

2,499,500

364,409,364

Loans and advances

609,823,665

987,638,008 3,942,737,737 13,802,640,495 9,905,459,422 29,248,299,327

Fixed assets including land, building, furniture and equipments

987,399

1,974,797

8,886,588

23,730,438

80,376,834

115,956,056

Other assets

20,627,700

40,847,039

17,889,120

4,785,635

84,149,494

Total Assets

1,987,112,898 4,880,459,844 4,939,013,445 13,891,156,568 9,988,335,756 35,686,078,511

Liabilities

Borrowing from other banks and fi nancial institutions

358,191,946

193,133,912 1,311,882,260 1,612,749,284 1,832,549,793 5,308,507,195

Deposits and other accounts

1,172,407,040 3,335,704,151 4,785,854,733

380,456,561 15,028,692,785 24,703,115,270

Other liabilities

235,078,092

565,099,001 1,110,808,535

263,655,319

328,898,683 2,503,539,630

Total liabilities

1,765,677,078 4,093,937,064 7,208,545,528 2,256,861,164 17,190,141,261 32,515,162,095

Net liquidity gap

221,435,820 786,522,780 (2,269,532,083) 11,634,295,404 (7,201,805,505) 3,170,916,416

Liquidity Statement

As at June 30, 2015


Notes to the Financial Statementsas at and for the year ended 30 June 2015

1 Company and its activities

(a) Legal statusDelta Brac Housing Finance Corporation Limited (here-in-after referred to as “DBH” or “the Company”) was incorporated as a public limited company and obtained the Certifi cate of Commencement of Business under Companies Act 1994 on May 11, 1996. The Company has also been granted license under the Financial Institutions Act 1993 on July 15, 1996. The Company went for public issue in 2007-08 and the shares of the Company are listed in Dhaka and Chittagong Stock Exchanges in Bangladesh.

(b) Nature of businessi) The principal activities of the Company during the year were providing loans for construction of houses, purchases of fl ats or houses, extension and improvement of existing houses or fl ats and purchase of housing plots.

ii) The Company has also various investment and fi nancing products like term deposit scheme, cumulative deposit, triple money deposit, double money deposit, annual income deposit, quarterly income deposit, monthly income deposit, easy way deposit, profi t fi rst deposit etc. for its individual and corporate clients.

2 Signifi cant accounting policies and basis of preparation

2.01 Statement of compliance The fi nancial statements have been prepared on a going concern basis and accrual method under historical cost convention and therefore did not take into consideration of the eff ect of infl ation. The preparation and presentation of the fi nancial statements and the disclosure of information have been made in accordance with the DFIM circular no. 11 dated 23rd December 2009 in conformity with Bangladesh Accounting Standards (BAS) and Bangladesh Financial Reporting Standards (BFRS), the Companies Act 1994, the Financial Institutions Act 1993, Securities and Exchange Rules 1987, the listing regulations of Dhaka and Chittagong Stock Exchanges and other applicable laws & regulations in Bangladesh and practices generally followed by Housing Finance Institutions.

As Bangladesh Bank is the primary regulator of Financial Institutions, the Bangladesh Bank guidelines, circulars, notifi cations and any other requirements are given preference to BAS and BFRS, where any contradictions arises.

2.02 Going concernThe fi nancial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

2.03 Functional and presentation currencyThese fi nancial statements are presented in Taka, which is the company’s functional currency except as indicated. Figures have been rounded off to the nearest taka.


2.04 Use of estimates and judgments

The preparation of fi nancial statements require management to make judgments, estimates and assumptions that aff ect the application of accounting policies and reported amounts of assets, liabilities, income and expenses, estimates. Assumptions also requires for disclosure of contingent assets and contingent liabilities at the date of fi nancial statements. Such estimate and assumptions are made on historical experience and other factors that are considered reasonable under the required circumstances. Actual results may diff er from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates is revised and in any future periods aff ected. The key items which involve these judgments, estimates and assumptions are discussed, below:

Impairment losses on loans and advances

In addition to the provision made for loans and advances based on the guideline of Bangladesh Bank, DBH reviews its loans and advances portfolio on monthly basis to assess whether any further allowances/ write back for impairment should be provided in the income statement. The judgments by the management is required in the estimation of these amounts and such estimations are based on assumption about a number of factors though actual results may diff er, resulting in future changes to the provisions.

2.05 Materiality and aggregation

Each material item considered by management as signifi cant has been presented separately in fi nancial statements. No amount has been set off unless the DBH has a legal right to set off the amounts and intends to settle on net basis. Income and expenses are presented on a net basis only when permitted by the relevant accounting standards.

2.06 Foreign currency transactions

Transactions in currencies other than the Company’s functional currency (foreign currencies) are recorded at the rates of exchange prevailing at the dates of the transactions. At each balance sheet date, monetary items denominated in foreign currencies are translated at the rates prevailing at the balance sheet date. Exchange diff erences are recognized in profi t or loss in the period in which they arise.

2.07 Liquidity Statement

The liquidity statement of assets and liabilities as on the reporting date has been prepared on residual maturity term as per the following bases:-

a) Balance with other banks and fi nancial institutions, money at call on short notice , etc. are on the basis of their maturity term.

b) Investments are on the basis of their respective maturity.


c) Loans and advances are on the basis of their repayment schedule and past trend of early settlement.

d) Fixed assets are on the basis of their useful lives.e) Other assets are on the basis of their realization / amortization.f ) Borrowings from other banks, fi nancial institutions and agents are as per their maturity/ repayment term.

g) Deposits and other accounts are on the basis of their maturity term and past trend of withdrawal by the depositors.

h) Other liabilities are on the basis of their payment/ adjustment schedule.

2.08 Property, plant and equipments

a. Recognition

In pursuant to BAS 16 “Property, plant and equipment” the cost of an item of property, plant and equipments is recognized as an asset if, and only if it is probable that future economic benefi ts associated with the item will fl ow to the entity, and the cost of the item can be measured reliably.

Fixed assets have been accounted for at cost less accumulated depreciation. Cost includes expenditure that is directly attributable to the acquisition of the items.

Subsequent costs of enhancement of an existing assets are recognized as a separate asset, only when it is probable that future economic benefi ts associated with the item will fl ow to the company and the cost of such items can be measured reliably. All other expenditures are charged to the Profi t & Loss account during the fi nancial period in which they are incurred.

Pursuant to BAS - 17 “Leases”, fi xed asset (motor vehicle) acquired under fi nance lease is accounted for at the lower of present value of minimum lease payments under the lease agreement and the fair value of asset. The related obligation under the lease is accounted for as liability. Finance charges are allocated to accounting period in manner so as to provide a constant rate of charge on the outstanding liability.

b. Depreciation

Fixed assets are recorded at historical cost less accumulated depreciation as per BAS-16 “Property, Plant and Equipment”. Depreciation is charged on straight line method using the following rates on all fi xed assets:

Category of assets Rates of depreciation per annum Estimated useful life

Furniture & Fixture 15% - 20% 5- 6.67 yearsEquipment 20% -25% 4- 5 yearsVehicles (both freehold and leasehold) 20% 5 yearsBuilding 3% 33.33 yearsLand Not depreciated


Depreciation on newly acquired assets are calculated from the month of acquisition (full month) and no depreciation is charged for the month in which the assets are disposed off .

c. De-recognition

An item of property, plant and equipment is de-recognized on its disposal. Sale price of fi xed assets are determined on the basis of fair value of the assets. Gain or loss on sale of assets are recognized in profi t & loss account as per provision of BAS 16 property, plant & equipments. Such gain or loss is determined as the diff erence between sales proceeds and carrying amount of the asset.

2.09 Intangible assets

In accordance with BAS 38 “Intangible assets”, intangible assets (computer software) are recorded at historical cost less accumulated amortization. Amortization is calculated on straight line method using the rate at 20% (estimated fi ve years useful life).

2.10 Loans - secured

Repayment of mortgage loans is made by way of Equated Monthly Installments (EMI) consisting of principal and interest. There are two modes of interest calculation on loans i.e., monthly reducing or annual reducing method as per loan agreement between customer and DBH. Eff ective interest rate is same as the rate quoted in case of monthly reducing method but higher under annual reducing method. EMI commences once the entire loans are disbursed. Pending commencement of EMIs, pre-EMI interest is payable every month.

2.11 Investment in securities

Investments are initially recognized at cost including acquisition charges with the investments. After initial recognition, investments in marketable securities except DBH First Mutual Fund and Green Delta Mutual Fund have been valued at cost or market price whichever is lower on an aggregate portfolio basis. Mutual Funds have been valued at 85% of latest published NAV available as on June 30, 2015 or cost price whichever is lower. Investment in non marketable securities have been valued at cost. Full provision for diminution in value of securities at the year end on aggregate portfolio basis excepts investment in mutual funds is made in the fi nancial statements as required by Bangladesh Bank DFIM circular No. 02 dated January 31, 2012. Provision for mutual funds at the year end is made as required by Bangladesh Bank DFIM circular No. 05 dated May 11, 2015.

2.12 Cash and cash equivalents

Cash and cash equivalents consist of cash, FDR, call investment and bank balances. For the purpose of statement of cash fl ow, cash and cash equivalents are prepared net off bank overdrafts.


2.13 Cash Flow Statements

The statement of cash fl ows is prepared using the direct method as stipulated in Bangladesh Accounting Standard - 7 “Cash Flow Statements” and in compliance with the instruction of Bangladesh Bank.

2.14 Revenue recognition

Interest incomeInterest income from loans and advances is accrued on a time basis, by reference to the principal outstanding and at the eff ective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the fi nancial asset (Loans and advances) to that asset’s net carrying amount.

All other interest income is recognized on accrual basis except interest of the loan accounts considered as non-performing. Interest income is suspended and full provision is made against the interest receivables on all non-performing loans when the installments are outstanding for more than six months or any other accounts which are considered doubtful of recovery on the basis of judgment of the management.

Fees and other charges on loansReceipt of loan processing/servicing fees and other fees are recognized as income on the date of receipt while the refund there against, if applicable, are set off with income during the year of refund.

Dividend income and profi t/(loss) on sale of marketable securitiesDividend income is recognized on accrual basis when the right to receive income is established. Profi t or loss arising from the sale of securities is accounted for only when shares are sold in the market and profi t is realized and loss is incurred.

Grant from IFCDuring the year under audit company received a grant from IFC under the agreement of “Performance Based Grant Initiative (PBGI)” between IFC and DBH for the purpose of expanding its target market segment to include informal sector borrowers and expand outreach to lower and middle income target segments.

Subjects to the terms and conditions during the year DBH received from IFC $90,000 (in 2013-14: $130,000.00) equivalent BDT 6,930,000 (in 2013-14 BDT 10,030,000).

As per BAS 20,” Accounting for Government Grants and Disclosure of Government Assistance” the grant is recognized in profi t and loss account on a systematic basis over the period in which the entity recognized as expenses the related cost for which the grants are intended to compensate.

2.15 Interest suspense account

Interest on non-performing loans is not recognized as revenue and credited to interest suspense account. Non performing loans refer to the loans when the installments are outstanding for more than six months and any other accounts which are considered impaired on the basis of judgments of the management.


2.16 Retirement benefi t costs

i) Gratuity schemeThe Company has a funded gratuity scheme for all eligible employees who complete minimum 5 years of confi rmed service with the Company. Required amount of gratuity is calculated on the basis of last basic pay depending on the length of service for every completed year as well as proportionate to the fraction period of service as of the respective fi nancial year. This scheme is approved by the National Board of Revenue (NBR) and administered by an independent Board of Trustees. Actuarial valuation of the gratuity scheme was made in 2015 to assess the adequacy of the liability for the scheme as per Bangladesh Accounting Standard - 19 “Employee Benefi ts”.

Following benefi ts are payable on retirement, death or leaving service:Less than 5 year of confi rmed service - Nil

Confi rmed service between 5 and 10 year - One month’s last drawn basic pay for every completed year of service.On completion of 10 years confi rmed service and above - Two month’s last drawn basic pay for every completed year of service.

Maximum benefi ts - 50 times basic pay

ii) Contributory provident fundThe Company has a contributory provident fund for its regular employees. The fund is approved by the National Board of Revenue (NBR), administered separately by a Board of Trustees and is contributed equally by the Company and the employees.

2.17 Taxation

Current taxProvision for income tax has been made at best estimate keeping in view the provisions of Income Tax Ordinance 1984 and amendments made thereto from time to time. Applicable rate of income tax for the company is 40%.

Deferred taxPursuant to BAS - 12 “Income Taxes” deferred tax is provided using the asset & liability method for all temporary timing diff erences arising between the tax base of assets and liabilities and their carrying value for fi nancial reporting purposes. Tax rate prevailing at the balance sheet date is used to determine deferred tax as the same rate is expected to be applicable at the time of settlement/adjustment of deferred tax asset or liability.

2.18 Provision for loans

In addition to the provision made for loans and advances based on the guidelines of Bangladesh Bank, the Company’s policy is to make provision for the loans and advances to cover the principal amount in respect of non performing loans when installments are outstanding for more than six months and any other overdue accounts on the basis of management’s assessment where there are possibilities of impairment in future. The Company has made adequate provision which is more than the minimum regulatory requirement.


2.19 Write off

Write off refers to recognition of the reduced or zero value of an asset. It also refers to an investment for which a return on the investment is now impossible or unlikely. Potential return along with such investment is thus canceled and removed (“written off ”) from the company’s balance sheet.

Recovery against debts written off is credited to revenue. Income is recognized where amounts are either recovered and/or adjusted against securities/properties or advances there against or are considered recoverable.

2.20 Interest expense

The Company has incurred interest and related expenses on account of term loan, deposit, ZCB, overdraft, fi nance lease and short term loan. In terms of provision of the Bangladesh Accounting Standard (BAS) -1 “Presentation of Financial Statements” interest expenses are recognized on accrual basis.

2.21 Earnings per share

Earnings Per Share (EPS) has been calculated in accordance with Bangladesh Accounting Standard - 33 “Earnings Per Share” and shown on the face of profi t and loss account and computation shown in note 33.

2.22 Related party disclosures

As per Bangladesh Accounting Standards (BAS) 24 “”Related Party Disclosures””, parties are considered to be related if one of the party has the ability to control the other party or exercise signifi cant infl uence over the other party in making fi nancial and operating decisions. The Company carried out transactions in the ordinary course of business on an arm’s length basis at commercial rates with its related parties. Related party disclosures have been given in note 36.

2.23 Events after the balance sheet date

As per BAS 10 “Events after the balance sheet date”, all material events occurring after the balance sheet date has been considered and where necessary, adjusted for or disclosed in note 38.3.

2.24 Contingent liabilities and contingent assets

The company does not recognize contingent liability and contingent assets but discloses the existence of contingent liability in the fi nancial statements. A contingent liability is probable obligation that arises from past events whose existence will be confi rmed by the occurrence or non-occurrence of uncertain future events not within the control of the company or present obligation that is not recognized because outfl ow of resources is not likely or obligation cannot be measured reliably.


2.25 Branch accounting

The Company has six offi ces (head offi ce & fi ve branches), with no overseas branch as on June 30, 2015. Accounts of the branches are maintained at the head offi ce which are included in the accompanying fi nancial statements.

2.26 General

a) Figures appearing in these Financial Statements have been rounded off to the nearest Taka. b) Previous year’s fi gures have been rearranged/restated/reclassifi ed, where necessary, in order to conform to current period’s presentation.

2.27 Status of compliance of Bangladesh Accounting Standards and Bangladesh Financial Reporting standards

Name of the BAS BAS No. StatusPresentation of Financial Statements 1 **Inventories 2 N/AStatement of Cash Flows 7 AppliedAccounting Policies, Change in Accounting Estimates and Errors 8 AppliedEvents after the Reporting Period 10 AppliedConstruction Contracts 11 N/AIncome Taxes 12 AppliedProperty, Plant and Equipment 16 AppliedLease 17 N/ARevenue 18 AppliedEmployee Benefi ts 19 AppliedAccounting for Government Grants and Disclosure of Governments Assistance 20 AppliedThe Eff ect of Changes in Foreign Exchange Rates 21 AppliedBorrowing Costs 23 N/ARelated Party Disclosures 24 AppliedAccounting and Reporting by Retirement Benefi ts Plans 26 N/AConsolidated and Separate Financial Statements 27 N/AInvestment in Associates 28 N/AInvestment in Joint Ventures 31 N/AFinancial Instruments: Presentations 32 **Earnings Per Share 33 AppliedInterim Financial Reporting 34 AppliedImpairment of Assets 36 AppliedProvision, Contingent Liabilities and Contingent Assets 37 AppliedIntangible Assets 38 AppliedFinancial Instruments: Recognition and Measurement 39 **Investment Property 40 N/AAgriculture 41 N/A


Name of the BFRS BFRS No. StatusShare Base Payment 2 N/ABusiness Combination 3 N/AInsurance Contracts 4 N/ANon-Currents Assets held for sale and discontinued operation 5 N/AExploration for and Evaluation of Mineral Resources 6 N/AFinancial Instruments: Disclosure 7 **Operating Segment 8 N/A

** DBH management has followed the principles of BAS & BFRS consistently in the preparation of the fi nancial statements to that extent as applicable to the fi nancial institution. Some of the standards have not been complied with, about which Bangladesh Bank has special guideline.N/A = Not applicable

2.28 Financial risk management

The Company always concentrates on delivering high value to its stakeholders through appropriate trade-off between risk and return. A well structured and proactive risk management system comprising risk management forum supported by risk management unit is in place within the Company to address risks relating to credit, market, liquidity and operations. In addition to the industry best practices for assessing, identifying and measuring risks, the Company also considers guidelines for managing core risks of fi nancial institutions issued by the Country’s Central Bank, Bangladesh Bank, vide FID Circular No. 10 dated September 18, 2005 for management of risks.

Credit riskTo encounter and mitigate credit risk, the company employed Multilayer approval process, policy for customers maximum asset exposure limit, mandatory search for credit report from Credit Information Bureau, looking into payment performance of customer before fi nancing, annual review of clients, adequate insurance coverage for funded assets, vigorous monitoring and follow up by special assets management team, strong follow up of compliance of credit policies by operational risk management department, taking collateral, seeking external legal opinion, maintaining neutrality in politics and following arm’s length approach in related party transactions, regular review of market situation and industry exposure etc.

Market riskThe Asset Liability Committee (ALCO) of the Company regularly meets to assess the changes in interest rate, market conditions, carry out asset liability maturity gap analysis, re-pricing of products and thereby takes eff ective measures to monitor and control interest rate risk. To encounter market risk we are negotiating for facilities that match the maturity structure with ideal interest rate, maintaining a balanced diversifi cation in investments and maintaining prudent provisioning policies. The Company has also strong access to money market and credit lines at a competitive rate through good reputation, strong earnings, fi nancial strength and credit rating.


Liquidity riskLiquidity risk arises when a company is unable to meet the short term obligation to its lenders and stakeholders. This arises from the adverse mismatch of maturities of assets and liabilities. Liquidity requirements are managed on a day to day basis by the Treasury Division which is responsible for ensuring that suffi cient funds are available to meet short term obligations, even in a crisis scenario, and for maintaining a diversity of funding sources. Treasury Division maintains liquidity based on historical requirements, anticipated funding requirements from operations, current liquidity positions, collections from fi nancing, available sources of funds and risks and returns.

Operational riskOperational risk is the potential loss arising from a breakdown in company’s systems and procedures, internal control, compliance requirements or corporate governance practices that results in human error, fraud, failure, damage of reputations, delay to perform or compromise of the company’s interests by employees. Appropriate internal control measures are in place, at the Company, to address operational risks. The Company has also established an internal control & compliance department (ICCD) to address operational risk and to frame and implement policies to encounter such risks. This department assesses operational risk across the Company as a whole and ensures that an appropriate framework exists to identify, assess and manage operational risk.

2.29 Implementation of BASEL-IITo comply with international best practices to make the FI’s capital more risk sensitive as well as to make the FI industry more shock absorbent and stable, Bangladesh Bank provided regulatory capital framework” Risk Based Capital Adequacy for FI’s” with eff ect from 01 January 2012.

DBH management is aware about guideline of Bangladesh Bank and implemented Capital Adequacy requirement according to BASEL-II. BASEL-II implementation committee is headed by Managing Director & CEO.

June 30, 2015Taka

June 30, 2014Taka

3 Cash

3.1 Cash in handLocal Currency 69,383 80,512 Foreign Currency - -

69,383 80,512

3.2 Balance with Bangladesh Bank and its' agentsBangladesh Bank:Local Currency 540,190,951 503,254,674 Foreign Currency 159,694 159,158

540,350,645 503,413,832 Balance with Sonali Bank being an agent of Bangladesh Bank 33,018 44,348

540,383,663 503,458,180


June 30, 2015Taka

June 30, 2014Taka

3.3 Cash Reserve Requirement (CRR) and Statutory Liquidity Reserve (SLR)

Cash Reserve Requirement and Statutory Liquidity Reserve have been calculated and maintained in accordance with Financial Institution Act - 1993 and Financial Institution Rules - 1994 and FID Circular no. 6 dated November 06, 2003 and FID Circular no. 02 dated November 10, 2004.

Cash Reserve Requirement (CRR) has been calculated at the rate of 2.5% on ‘Total Term Deposits’ which is preserved in current account maintained with Bangladesh Bank. ‘Total Term Deposit’ means Term or Fixed Deposit, Security Deposit against Lease/Loan and other Term Deposits, received from individuals and institutions (except banks & Financial Institutions). Statutory Liquidity Reserve (SLR) has been calculated at the rate of 5.0% on total liabilities (as defi ned in FID Circular No. 6 dated November 6, 2013), including CRR of 2.5% on Total Term Deposit. SLR is maintained in liquid assets in the form of cash in hand (notes & coin in BDT), balance with Bangladesh Bank and other banks and Financial Institutions, investment at call, unencumbered treasury bill, prize bond, savings certifi cate & any other assets approved by Bangladesh Bank.

June 30, 2015Taka

June 30, 2014Taka

3.3.1 Cash Reserve Requirement (CRR)

Required reserve 520,599,322 489,531,156 Actual average reserve maintained 540,717,512 510,506,789 Surplus/(defi cit) 20,118,189 20,975,633

3.3.2 Statutory Liquidity Reserve (SLR)

Required reserve (including CRR) 1,113,600,439 1,067,852,044 Actual reserve maintained (including CRR note -3.3.1) 1,723,104,576 1,857,941,571 Surplus/(defi cit) 609,504,138 790,089,527

4 Balance with other banks and fi nancial institutions

In Bangladesh (Note 4.1) 5,332,811,224 5,804,562,037 Outside Bangladesh - -

5,332,811,224 5,804,562,037

4.1 In Bangladesh

Current deposits 52,551,187 28,409,540 Short-term deposits 30,260,037 26,152,497 Fixed deposits 5,250,000,000 5,750,000,000

5,332,811,224 5,804,562,037


June 30, 2015Taka

June 30, 2014Taka

4.2 Maturity grouping of balance with other banks and fi nancial institutions

Payable on demand 52,551,187 28,409,540 Up to 1 month 480,260,037 826,152,497 Over 1 month but not more than 3 months 3,850,000,000 3,900,000,000 Over 3 month but not more than 6 months 950,000,000 1,050,000,000 Over 6 month but not more than 1 year - - Over 1 year but not more than 5 year - - Over 5 years - -

5,332,811,224 5,804,562,037

5 Money at call on short notice - -

6 Investments

Government securities: - - Other investments: Non marketable securities (Note-6.1) 11,999,500 11,999,500 United power- redeemable preference share - 90,000,000 Union Capital- redeemable preference share 50,000,000 - Marketable securities (Note-6.2) 302,409,864 268,109,238

364,409,364 370,108,738

6.1 Investment in non marketable securitiesNo. of shares

Bangladesh Rating Agencies Ltd. 24,995 2,499,500 2,499,500 Energyprima Ltd. ( Pre-IPO shares) 100,000 9,500,000 9,500,000

11,999,500 11,999,500 6.2 Investment in marketable securities

Sectors Market price2014-2015Taka

Cost price Cost price

Bank 2,940,700 3,640,039 4,614,723 Financial Institutions 439,600 175,000 - Engineering 13,047,525 20,214,020 18,762,806 Fuel & Power 17,532,596 16,527,850 4,298,923 Insurance 8,726,482 19,511,271 18,298,448 Investment 80,000,000 209,742,081 213,171,903 Food & Allied 2,825,800 2,907,764 351,421 Pharmaceuticals & Chemicals 10,882,720 10,982,774 1,780,839 Service and Real Estate 3,563,600 3,820,068 - Telecommunication 795,000 960,634 966,410 Cement 826,700 852,991 - Ceramics 740,000 763,604 - Textile 9,600,700 12,311,769 5,863,765

151,921,423 302,409,864 268,109,238


June 30, 2015Taka

June 30, 2014Taka

All investment in marketable securities are valued on an aggregate portfolio basis except DBH First Mutual Fund and Green Delta Mutual Fund. Mutual funs have been valued at 85% of latest published NAV available as on June 30, 2015. As on June 30, 2015 there was TK.55,566,941 gross unrealized loss on investment in marketable listed securities and Tk 2,499,500 for non marketable securities (Bangladesh Rating Agencies Ltd). Full provision for which has been recognized in the fi nancial statements. Market value has been determined on the basis of the value of securities at last trading date of June 2015 (last trading date was June 30, 2015).

June 30, 2015Taka

June 30, 2014Taka

6.3 Maturity grouping of investments:On demand 282,409,864 248,109,238 Upto 1 month - - Over 1 month but not more than 3 months - - Over 3 month but not more than 6 months 9,500,000 27,500,000 Over 6 month but not more than 1 year 10,000,000 - Over 1 year but not more than 5 year 60,000,000 72,000,000 Over 5 years 2,499,500 22,499,500

364,409,364 370,108,738

7 Loans and advancesInside BangladeshHousing Loan - secured 28,810,637,123 26,603,532,594 Installment Receivable - Housing Loan 104,598,044 115,322,370 Staff loan 125,302,400 123,654,297 Loan against Deposits 207,761,760 244,714,816

29,248,299,327 27,087,224,077 Outside Bangladesh - -

29,248,299,327 27,087,224,077

7.1 Maturity grouping of loans and advances

Repayable on demand 104,598,044 115,322,370 Not more than 3 months 1,492,863,629 1,194,846,278 Over 3 month but not more than 1 years 3,942,737,737 3,491,756,935 Over 1 year but not more than 5 year 13,802,640,495 12,349,672,867 Over 5 years 9,905,459,422 9,935,625,627

29,248,299,327 27,087,224,077

7.2 a) Loans and advances to institutions in which directors have interest

- -

b) Loans and advances to chief executive - - c) Loans and advances to senior executives 11,819,652 12,508,774 d) Loans and advances to customer group: i) Housing loan - customer 28,915,235,167 26,718,854,964 ii) Staff loan-housing & others 113,482,748 111,145,523 iii) Loan to depositors 207,761,760 244,714,816

29,248,299,327 27,087,224,077 e) Details of loan and advances industry-wise i) Housing Finance/ Real Estate 29,029,650,068 26,831,066,041 ii) Others 218,649,259 256,158,036

29,248,299,327 27,087,224,077


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June 30, 2014Taka

7.3 Loans and advances - geographical location-wise

Inside Bangladesh Urban Dhaka 26,864,838,332 24,723,725,474 Chittagong 2,226,542,265 2,210,297,359 Sylhet 156,918,730 153,201,244

29,248,299,327 27,087,224,077 Outside Bangladesh - -

29,248,299,327 27,087,224,077 7.4 Details of large loans and advances

There were no clients with outstanding amount and classifi ed loans/advances exceeding 15% of total capital of the institution.

7.5 Particulars of Loans and advances

i) Loans and advances considered good in respect of which the fi nancial institution is fully secured. 29,243,431,701 27,081,668,862

ii) Loans and advances considered good against which the fi nancial institution holds no security other than the debtors personal security. - -

iii) Loan and advances considered good and secured by the personal security of one or more parties in addition to personal guarantee of debtors. 4,867,626 5,555,215

iv) Loan and advances adversely classifi ed: for which no provision is created. - -

29,248,299,327 27,087,224,077

v) Loans and advances due by directors and offi cers of the fi nancial institution or any of them either separately or jointly with any other persons. 129,465,584 123,654,297

vi) Loans and advances due by companies or fi rms in which the directors of the fi nancial institution have interest as directors, partners or managing agents or in case of private companies, as members. - -

vii) Maximum total amount of advances including temporary advances made at any time during the period to directors, managers or offi cers of the fi nancial institution or any of them either separately or jointly with any other person. 130,240,167 130,702,807


June 30, 2015Taka

June 30, 2014Taka

viii) Maximum total amount of advances, including temporary advances, granted during the period to companies or fi rms in which the directors of the fi nancial institution have interest as directors, partners or managing agents or in the case of private companies as members. - -

ix) Due from other bank and fi nancial institutions - - x) Information in respect of classifi ed loans and advancesa) Classifi ed loans for which interest/profi t not credited to incomei) Increase/(decrease) of provision (specifi c) 205,276,920 154,476,260 ii) Amount of written off debt against fully provided debts 424,743 -

iii) Amount of debt recovered against the debt which was previously written off - -

b) Amount of provision kept against loan classifi ed as bad/ loss at balance sheet date 49,111,034 48,990,280 c) Amount of interest creditable to interest suspense account 39,621,245 33,697,414 xi) Cumulative amount of written off loans and advancesOpening Balance 4,941,646 4,941,646 Amount written off during the year 424,743 - Amount recovered against loans and advances previously written off 502,383 - Balance of written off loans and advances yet to be recovered 4,864,006 4,941,646

7.6 Classifi cation of loans and advancesUnclassifi edStandard (including Staff Loan and Loan against Deposits) 29,122,019,094 26,928,875,328 Special mention account (SMA) 38,604,063 99,537,992

29,160,623,157 27,028,413,320 Classifi edSub-standard 7,240,783 9,820,477 Doubtful 31,324,353 - Bad/loss 49,111,034 48,990,280

87,676,170 58,810,757

29,248,299,327 27,087,224,077

7.7 Calculation of provision for loans and advances as per Loan Classifi cation Report as on June 30, 2015.

Nature Base for provision Rate (%) Provision requiredStandard 28,788,954,934 1 287,889,549 Special Mentioned account 33,439,100 5 1,671,955 Sub- standard 4,961 20 992 Doubtful 3,205,050 50 1,602,525 Bad 5,744,258 100 5,744,258 Staff - standard 125,302,400 1 1,253,024 Loan against deposit - standard 207,761,760 1 2,077,618


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June 30, 2014Taka

8 Fixed assets including land, building, furniture and equipments:

Freehold assets ( Cost):Furniture & fi xture 40,718,496 38,861,571 Offi ce equipment 52,169,990 46,812,565 Vehicles 18,187,079 14,530,889 Building 85,283,922 4,785,450 Land 10,851,357 1,143,750 Intangible asset 1,675,730 1,135,230

208,886,574 107,269,455 Less: Accumulated depreciation 92,930,518 81,055,403

115,956,056 26,214,052 Detailed are shown in annexure A.

9 Other assets

Accounts receivable (Note-9.1) 61,686,836 132,249,628 Advances, deposits and prepayments (Note-9.2) 11,665,563 8,007,172 Deferred tax assets (Note-9.3) 8,483,276 10,965,207 Stamps and pay order in hand 2,313,819 2,063,173

84,149,494 153,285,180 9.1 Accounts receivable

Interest receivable 56,664,248 96,643,638 Dividend receivable 1,575,343 1,574,154 Sundry receivable 3,447,245 34,031,836

61,686,836 132,249,628

9.2 Advances, deposits and prepayments

Advance to employees 286,805 235,806 Advance to suppliers 4,722,917 1,870,000 Security deposits 3,096,000 3,004,000 Prepaid expenses 259,854 - Advance rent 3,299,987 2,897,366

11,665,563 8,007,172 9.3 Deferred tax assets

Balance as on July 1 10,965,207 10,169,030 Add: Addition during the year (note-9.3 a) (2,481,931) 796,177 Balance as at 30 June 8,483,276 10,965,207


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June 30, 2014Taka

9.3 a Calculation of deferred tax

Carrying amount of Fixed Assets(excluding land) 103,568,765 23,742,440 Tax base value of Fixed Assets 116,371,030 41,221,608 Deductible temporary diff erence 12,802,265 17,479,168

Applicable tax rate 40.00% 42.50%

i) Deferred tax assets on fi xed assets 5,120,906 7,428,646

Carrying amount-Loss on sale of securities 33,623,695 35,365,604 Tax base - - Deductible temporary diff erence 33,623,695 35,365,604

Applicable tax rate 10% 10%

ii) Deferred tax assets on loss on sale of securities 3,362,370 3,536,560

Total deferred tax assets ( i+ ii) 8,483,276 10,965,207 Deferred tax (liability)/assets at the beginning of the year 10,965,207 10,169,030 Deferred tax income/(Expense) (2,481,931) 796,177

10 Borrowing from other banks and fi nancial institutions

Inside Bangladesh (Note 10.1) 5,002,857,195 6,683,762,471 Outside Bangladesh (Note 10.2) 305,650,000 368,316,667

5,308,507,195 7,052,079,138

10.1 Inside Bangladesh

a Secured short and long-term loansPubali Bank Limited 750,000,000 1,050,000,000 Citi Bank, N.A. 200,000,000 -Commercial Bank of Ceylon plc 96,460,000 153,040,000

1,046,460,000 1,203,040,000

b Unsecured long-term loanBangladesh Bank (housing refi nance) 3,187,238,345 3,467,413,236

3,187,238,345 3,467,413,236

c Bank OverdraftCommercial Bank of Ceylon plc 270,002,757 159,557,273 Citi Bank, N.A. 23,162,677 507,940 HSBC 5,145,802 9,072,577 Standard Chartered Bank 75,418,089 86,165,562 Standard Bank Ltd. 45,332,422 108,002,966 Midland Bank Ltd. 10,076,389 284 United Commercial Bank Ltd. - 245 Dhaka Bank Ltd. - 2,388 South Bangla Bank 974 - NRB Bank 19,740 -

429,158,850 363,309,235


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June 30, 2014Taka

d Call loansThe City Bank Ltd. - - United Commercial Bank Ltd. 40,000,000 100,000,000 Dutch Bangla Bank Ltd. 50,000,000 370,000,000 Pubali Bank Ltd. 40,000,000 - Mutual Trust Bank Ltd. 60,000,000 - Farmers Bank Ltd. - 50,000,000 Sonali Bank Ltd. 50,000,000 150,000,000 Agrani Bank Ltd. - 150,000,000 Prime Bank Ltd. - 150,000,000 Premier Bank Ltd. - 60,000,000 BRAC Bank Ltd. - 110,000,000 NRB Global Bank Ltd. - 150,000,000 Meghna Bank Ltd. - 160,000,000 Janata Bank Ltd. 50,000,000 100,000,000 Basic Bank Ltd. 50,000,000 100,000,000

340,000,000 1,650,000,000

Total inside Bangladesh(a+b+c+d) 5,002,857,195 6,683,762,471

10.2 Outside Bangladesh

Netherlands Development Finance Company (FMO) 94,000,000 156,666,667 Triodos 211,650,000 211,650,000

305,650,000 368,316,667

10.3 Security against borrowings from other banks and fi nancial institutionsSecured 1,781,268,850 1,934,665,902 Unsecured 3,527,238,345 5,117,413,236

5,308,507,195 7,052,079,138

The aforesaid secured long term loans(10.1 a), loans from outside Bangladesh(10.2) and overdraft from Commercial Bank of Ceylon (CBC) are secured by fi rst charge on company’s all present and future movable and immovable assets including book debts (except Bangladesh Bank deposits and any lien created over short term fi xed deposit accounts with any bank or similar depository institution as security for short term debt) ranking pari-passu security charges with other lenders of the company. Bank overdraft except overdraft from CBC and short term loan from Citi Bank, NA are secured by FDR.

10.4 Maturity grouping of borrowings from other banks and fi nancial institutions

Payable on demand 340,000,000 1,650,000,000 Up to 1 month 18,191,946 19,886,813 Over 1 month but within 3 months 193,133,912 196,736,412 Over 3 months but within 1 year 1,311,882,260 846,553,894 Over 1 year but within 5 years 1,612,749,284 2,255,038,557 Over 5 years 1,832,549,793 2,083,863,462

5,308,507,195 7,052,079,138


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June 30, 2014Taka

11 Deposits and other accounts

Fixed deposits ( Note: 11.1) 24,703,115,270 21,549,503,042

11.1 Fixed Deposits

Balance as on 01 July 21,549,503,042 19,539,937,251 Addition during the year 43,031,208,580 30,567,499,247

64,580,711,622 50,107,436,498 Repayment made during the year 39,877,596,352 28,557,933,456 Balance as at 30 June 24,703,115,270 21,549,503,042

11.2 Group-wise break-up of deposits and others accounts

Government - - Bank 3,400,000,000 700,000,000 Other institutions 9,479,057,032 9,469,274,909 Individuals 11,824,058,238 11,380,228,133

24,703,115,270 21,549,503,042

11.3 Maturity analysis of deposits

Payable on demand - - Up to 1 month 1,172,407,040 779,987,827 Over 1 month but within 6 months 6,340,500,055 2,803,491,920 Over 6 months but within 1 year 1,781,058,829 2,320,161,315 Over 1 year but within 5 years 380,456,561 328,271,804 Over 5 years but within 10 years 12,737,460,303 12,946,961,418 Over 10 years 2,291,232,482 2,370,628,758

24,703,115,270 21,549,503,042

12 Other liabilities

Provision for loans & investment (Note: 12.1) 1,053,538,105 874,886,032 Provision for income tax (Note: 12.2) 41,774,361 170,118,829 Interest suspense (Note: 12.3) 39,621,245 33,697,414 Other payables (Note:12.4) 1,368,605,919 1,488,862,191

2,503,539,630 2,567,564,466

12.1 Provision for loans and investment

Balance as on July 1 874,886,032 679,372,395 Provision written off (218,068) - Provision recovered for the year - - Provision charged for the year 178,367,758 195,513,637 Recoveries of amounts previously written off 502,383 -Balance as at 30 June 1,053,538,105 874,886,032


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June 30, 2014Taka

12.1.1 General Provision

Balance as on July 1 269,288,753 252,024,386 Charged during the year 23,603,393 17,264,367 Balance as at 30 June 292,892,146 269,288,753

12.1.2 Specifi c Provision

Balance as on July 1 497,018,283 342,542,023 Provision written off (218,068) - Provision recovered during the year - - Provision charged for the year 205,276,920 154,476,260 Provision no longer required written back. - - Recoveries of amounts previously written off 502,383 - Balance as at 30 June 702,579,518 497,018,283

12.1.3 Provision on Loans and advances

General Provision charged during the year 23,603,393 17,264,367 Specifi c Provision charged during the year 205,276,920 154,476,260

228,880,313 171,740,627

12.1.4 Provision for diminutions in the value of investments

Balance as on July 1 108,578,996 84,805,986 Provision during the year (50,512,555) 23,773,010 Balance as at 30 June 58,066,441 108,578,996

12.2 Provision for income tax including deferred tax

Balance as on July 1 170,118,829 178,585,263 Addition during the year (Current tax) 571,656,355 592,645,854 Tax paid (700,000,823) (601,112,288)

41,774,361 170,118,829 Deferred tax liability - - Balance as at 30 June 41,774,361 170,118,829

12.3 Interest suspense

Balance as on July 1 33,697,414 24,538,519 Interest suspended during the year 6,130,506 9,158,895 Recovery of suspended interest during the year - - Written off suspended interest during the year (206,675) - Balance as at 30 June 39,621,245 33,697,414


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June 30, 2014Taka

12.4 Other payables

Interest payable on deposit & loans 1,165,902,196 1,237,568,280 Sundry creditors 72,648,767 80,778,390 Unclaimed instruments 25,547,407 23,624,461 Payable to clients 55,049,686 54,232,764 Loan under litigation 9,004,311 14,158,103 Privileged creditors 38,576,469 75,557,520 Liability for expenses 1,877,083 2,942,673

1,368,605,919 1,488,862,191

13 Share Capital

13.1 Authorized capital

199,950,000 Ordinary shares of Tk. 10 each 1,999,500,000 1,999,500,000 5,000 Preference shares of Tk. 100 each 500,000 500,000

2,000,000,000 2,000,000,000

13.2 Issued, subscribed, called and paid -up capital

Ordinary shares116,049,375 Ordinary shares Taka 10 each(2013-14: 116,049,375 Ordinary shares Taka 10 each) 1,160,493,750 1,160,493,750

1,160,493,750 1,160,493,750

2014-2015No. of shares Taka

13.3 Capital of the Company is held by the following shareholders

Ordinary sharesLocal shareholders:BRAC 21,339,630 213,396,300 Delta Life Insurance Company Ltd 20,456,500 204,565,000 Green Delta Insurance Company Ltd 17,761,727 177,617,270 General shareholders 14,415,771 144,157,710

73,973,628 739,736,280 Foreign shareholders:International Finance Corporation 14,183,801 141,838,010 HDFC Investments Ltd (HIL), India 14,183,801 141,838,010 General shareholders 13,708,145 137,081,450

42,075,747 420,757,470

116,049,375 1,160,493,750


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June 30, 2014Taka

13.4 Classifi cation of shareholders by holding as required by Regulation 37 of the listing Regulation of Dhaka Stock Exchange Ltd.

Shareholding range No. of shareholders No. of shares % of share holding

01-500 883 182,394 0.16 501-5000 1053 1,798,522 1.55 5001-10000 76 546,949 0.47 10001-20000 51 679,000 0.59 20001-30000 17 428,418 0.37 30001-40000 9 317,399 0.27 40001-50000 7 340,587 0.29 50001-100000 10 795,063 0.69 100001-1000000 22 7,255,006 6.25 Over 1000000 10 103,706,037 89.36

116,049,375 100

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June 30, 2014Taka

13.5 Capital Adequacy Ratio - As per BASEL-II

1. Tier-1 (Core Capital ) 1.1 Fully Paid-up Capital/Capital Deposited with BB 1,160,493,750 1,160,493,750 1.2 Statutory Reserve 811,924,646 674,873,901 1.3 Non-repayable Share premium account 55,000,000 55,000,000 1.4 General Reserve 608,040,000 408,040,000 1.5 Retained Earnings 361,958,020 317,378,479 1.6 Minority interest in Subsidiaries - - 1.7 Non-Cumulative irredeemable Preferences shares - - 1.8 Dividend Equalization Account 173,500,000 160,000,000 1.9 Others (if any item approved by Bangladesh Bank) - - 1.10 Sub-Total (1.1 to 1.9) 3,170,916,416 2,775,786,130

Deductions from Tier-1 (Core Capital )1.11 Book value of Goodwill and value of any contingent assets

which are shown as assets - -

1.12 Shortfall in provisions required against classifi ed assets - - 1.13 Shortfall in provisions required against investment in shares - - 1.14 Remaining defi cit on account of revaluation of investments

in securities after netting off from any other surplus on the securities.

- -

1.15 Any investment exceeding the approved limit. - - 1.16 Investments in subsidiaries which are not consolidated - - 1.17 Increase in equity capital resulting from a securitization

exposure - -

1.18 Other (if any) - - 1.19 Sub Total (1.11-1.18) - - 1.20 Total Eligible Tier-1 Capital (1.10-1.19) 3,170,916,416 2,775,786,130


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June 30, 2014Taka

2 .Tier-2 (Supplementary Capital) 2.1 General Provision (Unclassifi ed loans up to specifi ed limit +

SMA + off Balance Sheet exposure) 208,258,100 208,650,035 2.2 Assets Revaluation Reserves up to 50% - - 2.3 Revaluation Reserve for Securities up to 45% - - 2.4 Revaluation reserve for equity instrument up to 10% - - 2.5 All other preference shares - - 2.6 Other (if any item approved by Bangladesh Bank) - - 2.7 Sub-Total (2.1 to 2. 6) 208,258,100 208,650,035 2.8 Applicable Deductions if any - - 2.9 Total Eligible Tier-2 Capital (2.7-2.8) 208,258,100 208,650,035

Total capital 3,379,174,516 2,984,436,165

Total risk weighted assets 19,432,276,186 19,150,649,647 Required capital based on risk weighted assets(10%) 1,943,227,619 1,915,064,965 Surplus 1,435,946,897 1,069,371,200

Capital Adequacy Ratio:On core capital 16.32% 14.49%On actual capital (against standard of minimum 10%) 17.39% 15.58%Supplementary Capital to risk weighted assets 1.07% 1.09%

14 Share premium account

Ordinary shares 55,000,000 55,000,000 55,000,000 55,000,000

15 Statutory reserve

Balance as on July 1 674,873,901 553,405,189 Add: addition during the year (20% of profi t after tax) 137,050,745 121,468,712 Balance as at 30 June 811,924,646 674,873,901

This reserve has been created as per the provision of Financial institution Rules 1993.

16 Other reserves

Contingency Reserve (Note 16.1) 600,000,000 400,000,000 General Reserve (Note 16.2) 8,000,000 8,000,000 Dividend equalization reserve (Note 16.3) 173,500,000 160,000,000 Capital redemption reserve 40,000 40,000

781,540,000 568,040,000

An amount of Tk 40,000/- has been transferred out of profi t to “Capital redemption reserve “ in redeeming 400 nos of preference share @ Tk 100 each as per section 154(1)(C) of Companies Act 1994.


June 30, 2015Taka

June 30, 2014Taka

16.1 Contingency Reserve

Balance as on July 1 400,000,000 240,000,000 Add: addition during the year 200,000,000 160,000,000 Balance as at 30 June 600,000,000 400,000,000

16.2 General Reserve

Balance as on July 1 8,000,000 8,000,000 Add: addition during the year - - Balance as at 30 June 8,000,000 8,000,000

16.3 Dividend equalization reserve

Balance as on July 1 160,000,000 130,000,000 Add: addition during the year 13,500,000 30,000,000 Balance as at 30 June 173,500,000 160,000,000

17 Business commitments and contingencies

17.1 Contingent liabilities 16,739,437 71,985,456

The said amount claimed by the tax authority for the assessment year 2004-05, 2005-06 assessed by disallowing statutory reserve and simple interest charged on net tax payable as per assessment order.

Consequently, there is a contingent liability for the above amounts which have not been recognized as liability in anticipation of consequential relief would be granted in favor of the Company like the previous and subsequent years. However we have enough tax provision to cover the above amount, if any liability arises in future.

17.2 Other Commitments

In the normal course of business, the company makes various commitments, contracts and disbursements. No material losses are anticipated as a result of these transactions. Details are given below:

Housing fi nance commitments outstanding 404,305,000 372,055,789

Bank borrowing commitments outstanding - -

17.3 Capital expenditure commitments

a) Contracted and incurred but not provided for in the accounts Nil Nilb) Approved by the Board but not contracted for Nil Nil

17.4 Unacknowledged debts

The Company had no claim, legal or other against it, which has not been acknowledged as debt at the balance sheet date.


2014 - 2015Taka

2013 - 2014Taka

18 Interest income

Interest on loans 3,877,136,464 3,950,894,027 Interest on placement with other banks & BB FX deposits 546,287,784 681,798,428 Interest on short term investment - 2,376,389

4,423,424,248 4,635,068,844

19 Interest on deposits and borrowing

Interest on term loans 323,728,869 467,371,570 Interest on deposits 2,307,841,081 2,500,138,519 Interest on short-term borrowing 147,832,188 97,365,889 Interest on overdraft 5,891,183 6,071,363 Interest on fi nance lease - 74,392

2,785,293,321 3,071,021,733

20 Income from investments

Gain/(loss) on sale of marketable securities 1,741,909 2,733,722 Dividend income 11,244,900 7,298,751 Interest on Orascom Telecom Bond - 9,570,000

12,986,809 19,602,473

21 Commission, exchange and brokerage

Loan fees 62,855,394 57,100,435 Other charges and fees 41,535,222 41,375,283

104,390,616 98,475,718

22 Other operating income

Property service income 5,529,161 8,025,051 Gain on sale of fi xed assets - 158,873 Grant from IFC 6,930,000 10,030,000 Miscellaneous income 15,569,405 10,070,815

28,028,566 28,284,739

23 Salary and allowances 228,428,656 189,059,414

Salary and allowances include annual contribution of Tk. 6,634,674 (2013-14: Tk. 6,226,938) to provident fund and Tk. 23,597,597 (2013-14: Tk. 10, 097,593) to gratuity fund.

24 Rent, taxes, insurance, electricity, etc

Rent, rates & taxes 28,772,137 26,480,290 Insurance 2,165,414 2,090,929 Electricity 4,599,556 4,245,842 Water 380,992 346,835

35,918,099 33,163,896


2014 - 2015Taka

2013 - 2014Taka

25 Legal and professional expenses

Law charges 613,071 702,501 Other professional charges 778,806 698,947

1,391,877 1,401,448

26 Postage, stamps, telecommunication, etc.

Postage & courier service 945,103 907,450 Stamp expenses 2,196,337 882,172 Telephone & internet 2,904,125 3,497,621

6,045,565 5,287,243

27 Stationery, printing, advertisements, etc.

Printing 2,239,549 2,636,457 Stationery 1,374,864 1,111,915 Publicity and advertisement 4,945,635 15,517,914

8,560,048 19,266,286 28 Directors' fees and expenses

Fees for attending meeting 255,000 350,000 Incidental meeting expenses 566,241 721,140

821,241 1,071,140 29 Auditors' fees

Statutory annual audit fees (including VAT) 287,500 258,750 287,500 258,750

30 Depreciation, repairs & maintenance

Freehold assets 13,150,853 12,343,171 Leasehold assets - 1,071,304 Intangible assets 153,108 179,111

13,303,961 13,593,586 Repairs & MaintenanceVehicle 1,382,385 1,092,700 Offi ce equipment & premises 4,473,836 3,289,677 Computer hardware & software 3,105,895 2,692,854

8,962,116 7,075,231 22,266,077 20,668,817


2014 - 2015Taka

2013 - 2014Taka

31 Other expenses

Staff training & recruitment expense 587,573 3,094,959 Offi ce security 2,368,110 2,243,836 Transportation, traveling & conveyance 11,373,241 11,187,994 Canteen expense 1,430,027 2,072,897 Business promotion & entertainment 855,709 676,127 Car fuel 1,677,339 1,721,917 Books and papers 77,766 83,197 Bank charges 2,501,717 3,036,462 Loss on sale of fi xed assets 52,965 - Donation, subscription and Fees 2,006,275 5,488,000 Public relation & AGM expense 523,324 751,407 Brokerage 627,706 488,220 Staff welfare expense 165,210 42,000 Outsource agency charges 5,081,125 4,039,155

29,328,087 34,926,171

32 Retained earnings

Balance as on July 01 317,378,479 321,667,067 Add: Profi t after tax for the year transferred from Profi t & Loss Account 685,253,724 607,343,562 Accumulated profi t available for distribution 1,002,632,203 929,010,629 Less: AppropriationsTransferred to statutory reserve 137,050,745 121,468,712 Transferred to contingency reserve 200,000,000 160,000,000 Transferred to dividend equalization reserve 13,500,000 30,000,000 Transferred to capital redemption reserve - 40,000 Dividend on preference share - 10,000,000 Cash dividend paid for last year 290,123,438 290,123,438

640,674,183 611,632,150 Balance as at 30 June 361,958,020 317,378,479

33 Earnings Per Share

Profi t after Tax 685,253,724 607,343,562 Less: Preference share dividend - 10,000,000 Profi t available for ordinary shareholders 685,253,724 597,343,562

Number of shares outstanding for calculating basic EPS 116,049,375 116,049,375 Basic earnings per share 5.90 5.15

No diluted earning per share is required to be calculated for the year as there was no convertible securities for dilution during the year.


2014 - 2015Taka

2013 - 2014Taka

34 Dividend on ordinary shares

a) Proposed dividend:The Board of Directors in its 84th meeting held on September 29, 2015 has recommended cash dividend @ 30% i.e. Taka 3.00 per ordinary share for the year ended 30 June 2015 for placement before the shareholders for approval at 19th AGM of the company.

b) Dividend to non -resident shareholders:The Company’s non resident shareholders as on 30 June 2015 include two foreign investors (International Finance Corporation and HDFC Investments Ltd, India ) holding total 28,367,602 shares (2013-14 :28,367,602). The shareholders in its 18th AGM approved 25% cash dividend for the year ended 30 June 2014. Cash dividend Tk. 70,919,005 remitted duly after deduction of tax applicable as per law to the non resident shareholders during the year under review.

35 Foreign currency inward/outward remittance

Name of theOrganization Currency Particulars Amount in

FC Amount inTk.

FMO BDT Principal - 62,666,666 FMO BDT Interest - 14,911,838 Triodos BDT Principal - - Triodos BDT Interest - 25,143,904 Singapore Institute of Management

SGD Membership & training fees

133.75 8,088

Inward remittanceInternational Finance Corporation (IFC)

BDT Grant - 6,930,000

36 Related party transactions

The company has entered into transactions with other entities in normal course of business that fall within the defi nition of related party as per Bangladesh Accounting Standard - 24 “Related Party Disclosures”. The terms of related party transaction are not signifi cantly diff erent from those that could have been obtained from third parties. The signifi cant related party transactions are as follows:

Name of the related parties Relationship ParticularsExpenses incurredduring the year

Taka

Delta Life Insurance Company Limited Shareholder Insurancepremium 1,232,883

Green Delta Insurance Company Limited Do Insurance premium 932,531

Name of the related parties Relationship ParticularsReceived

during the yearTaka

International Finance Corporation (IFC) Shareholder Grant 6,930,000


37 Number of Employees

During the year under audit, there were 162 (2013-2014: 169) employees employed for the full period and 52 (2013-2014:26) employees for less than full period at a remuneration of Taka 3,000 and above per month.

38 General Disclosure

38.1 Name of Directors and entities in which they have interest as Director as at 30 June 2015:

Name Position at DBH

Involvement in other organization

Name of the Organization in which they have interest Position

Mr. Faruq A. Choudhury Chairman BRAC Member, Governing Body

Mr. Nasir A. Choudhury Director

Green Delta Insurance Company Ltd. AdvisorNascom (Pvt.) Ltd. Managing DirectorProgressive Life Insurance Co. Ltd. Director (Representing GDIC)United Hospital (Pvt) Ltd Director (Representing GDIC)Green Delta Securities Ltd. Chairman (Representing GDIC)Green Delta Capital Ltd. Chairman (Representing GDIC)

Mr. A Z Mohammad Hossain Director Chandra Spinning Mills Ltd Managing Director

Mr. Rajeev Sardana, FCA Director HDFC Ltd. Member of the Executive Management, HDFC

Ms. Mehreen Hassan, Bar-at-Law Director NIL NIL

Mr. Swapan Kumar Sarkar, FCA Director

Delta Life Insurance Company Ltd. Managing Director & CEODLIC Securities Ltd. Chairman

Ms. Adeeba Rahman, ACII- Life Director Delta Life Insurance Company Ltd. Additional Managing Director

Dr. A M R Chowdhury Director BRAC Vice Chairperson

Mr. M I Chowdhury Independent Director

Social Development Foundation(SDF) Chairman

Prime Finance & Investment Ltd. Independent Director

Rajdhani Mohila College Chairman, Managing Committee

Ms. Syeda Rizwana Hasan

Independent Director

Bangladesh Environmental Lawyers Association (BELA) Chief Executive

Rangpur Dinajpur Rural Services (RDRS) ChairpersonNGO Forum on Ship Breaking Member, Executive BoardSANDEE Member, Board


38.2 Audit Committee

The Audit Committee consists of the following Directors of the Board:

Name Status with the Company

Status with the Committee

Educational Qualifi cation

Mr. M I Chowdhury Independent Director Chairman MA

Mr. Faruq A. Choudhury Chairman MemberB.A. (Honors) & Diploma in International Law

(Tufts University, USA)Mr. Nasir A. Choudhury Director Member MAMr. A Z Mohammad Hossain Director Member L.L.BMr. Swapan Kumar Sarkar Director Member FCA

During the period from July 2014 to June 2015, the audit committee of the Board conducted 4 (four) meetings.

Sl No Meeting No Meeting Date1 27th 10/09/20142 28th 10/11/20143 29th 20/01/20154 30th 22/04/2015

The Committee discussed among others, the following issues:

Review of Internal Compliance Report.Review of the un-audited quarterly fi nancial statements and the audited fi nancial statements.

38.3 Events after the Balance Sheet date

There is no material adjusting or non-adjusting events after the balance sheet date.

38.4 Comparative Information

Previous year’s fi gures have been re-arranged whenever considered necessary to conform to current year’s presentation.


Annexure-A

Schedule of Fixed assets and Intangible assets

Amount in Taka

Particulars

COST

DEPRECIATION / AMORTIZATION

Written

down value

as at 30 June

2015

Balance as

on 1 July

2014

Additions

during the

year

Disposals

during the

year

Balance as at

30 June 2015

Balance as

on 1 July

2014

Charged for

the year

Adjustment

on disposals

Balance as

at 30 June

2015

Free hold assets:

Furniture & fi xture

38,861,571

3,073,207

1,216,282 40,718,496

30,728,676

3,564,527

1,018,039 33,275,164

7,443,332

Equipment

46,812,565

5,651,744

294,319 52,169,990

36,696,284

5,491,161

294,287 41,893,158

10,276,832

Vehicles

14,530,889

4,045,000

388,810 18,187,079

11,025,277

2,578,620

116,521 13,487,376

4,699,703

Building

4,785,450 80,498,472

- 85,283,922

1,745,014

1,516,546

- 3,261,560 82,022,362

Land

1,143,750

9,707,607

- 10,851,357

- -

- -

10,851,357

106,134,225 102,976,030

1,899,411 207,210,844

80,195,251

13,150,854

1,428,847 91,917,258 115,293,586

Intangible asset

Software

1,135,230

540,500

- 1,675,730

860,152

153,108

- 1,013,260

662,470

Total 2014-15

107,269,455 103,516,530

1,899,411 208,886,574

81,055,403

13,303,962

1,428,847 92,930,518 115,956,056

Total 2013-14

113,423,585

3,996,390 10,150,520 107,269,455

77,574,568

13,593,586

10,112,751

81,055,403

26,214,052

I/We ………………………………………………………………………………………………………………………………………………………………of ……………………………………………………………………………………………………………………………… being a member of Delta Brac Housing Finance Corporation Ltd. and a holder of ……………………………………………… shares hereby appoint Mr./Ms ……………………………………………………………………………… of ……………………………………………………… as my/our proxy to vote for me/us and on my/our behalf at the 19th Annual General Meeting of the Company to be held on December 08, 2015 (Tuesday) and any adjournment thereof.

Signed this .......................................... day of .................................... 2015.

Signature ...................................................................... Signature...........................................................................

Name .............................................................................. Name .................................................................................... (Member) (Proxy)

Folio/BO ID No. ......................................................... Folio/BO ID No. ...................................................................................

NOTES:1) This form of proxy, duly completed, must be deposited at least 48 hours before the meeting at the registered

offi ce. Proxy is invalid if not duly signed and stamped.

2) Signature of the Shareholders should agree with the Specimen Signature registered with the Company and Depository Register.

A t t e n d a n c e S l i pI/We hereby record my/our attendance at the 19th Annual General Meeting of Delta Brac Housing Finance Corporation Limited on December 8, 2015 (Tuesday) at 11.00 a.m. at The Eden Ball Room of Hotel Amari, House- 47, Road- 41, Gulshan-2, Dhaka-1212 as a holder of ................... shares of the Company.

Signature ...............................................................................

Name ..................................................................................................................................................................................................................... (Member/Proxy)

Folio/BO ID No. ...............................................................................................................................................................................................

Note: Shareholders attending the meeting in person or by proxy are requested to complete the Attendance Slip and hand it over at the entrance of the meeting hall.

Head Offi ce: Landmark Building (9th Floor) 12-14 Gulshan North C/A, Gulshan-2, Dhaka-1212, PABX: 09612 334455,+880 (2) 9842374, Fax: + 880 (2) 9882110 Web: www.deltabrac.comE-mail: [email protected]

RevenueStamp

DELTA BRAC HOUSING FINANCE CORPORATION LIMITED

DELTA BRAC HOUSING FINANCE CORPORATION LIMITED

P r o x y F o r m

Head Offi ce: Landmark Building (9th Floor) 12-14 Gulshan North C/A, Gulshan-2, Dhaka-1212, PABX: 09612 334455,+880 (2) 9842374, Fax: + 880 (2) 9882110 Web: www.deltabrac.comE-mail: [email protected]

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